Open Banking is helping transform financial services by fostering a dynamic ecosystem in which banks, fintechs and third-party providers collaborate to deliver more personalised, accessible and innovative financial products.
Plugging the holes in Open Banking
But with this progress comes a growing set of security challenges, most notably around Application Programming Interfaces (APIs) — the very tools that make Open Banking possible.
APIs have become the connective tissue of modern finance.
They enable the seamless flow of customer data between platforms, supporting real-time payments, tailored lending decisions, and integrated financial experiences.
However, their widespread adoption has also expanded the threat surface, exposing financial institutions to new forms of cyber risk.
The Emerging API Threat Landscape
As the number of APIs within and across financial institutions increases, so too do the vulnerabilities. Common API security flaws include:
- Broken object-level authorisation: Failure to enforce user permissions can expose sensitive customer records, as seen in a fintech breach where attackers accessed loan data via weak authorisation protocols.
- Weak user authentication: In one payment platform incident, inadequate authentication allowed unauthorised access to payment data.
- Injection attacks: SQL injections have resulted in data leaks and compromised systems, including a major case where customer account data was extracted through malicious code.
- Excessive data exposure: Poorly designed APIs can leak customer information by returning more data than necessary — such as partial credit card numbers being exposed through support channels.
These risks are compounded by the complexity of today’s digital financial environments.
API ecosystems now span on-premise and cloud infrastructures and connect to a growing web of third-party platforms.
Each integration point presents a potential vulnerability — especially when shadow APIs (unmonitored or undocumented interfaces) and inconsistent security standards are present – according to Verizon’s 2024 Data Breach Investigations Report.
Plugging the Gaps in the Supply Chain
One of the greatest challenges facing financial institutions is managing the security posture of third-party providers.
The supply chain introduces risks that extend beyond direct control — a compromised vendor, misconfigured interface or undocumented endpoint can lead to operational and reputational damage.
To mitigate these risks, firms must adopt a zero-trust security model, continuously verifying the identity and permissions of all entities accessing their systems.
Standardised security requirements should be built into third-party contracts, while ongoing monitoring and regular penetration testing should be used to uncover vulnerabilities.
Comprehensive API management platforms can help by cataloguing and monitoring APIs across the enterprise, ensuring visibility and governance over both internal and external interfaces.
Innovation and Security: Complementary, Not Contradictory
Open Banking continues to offer tremendous promise: increased competition, financial inclusion, improved customer experience, and more agile product development.
Fintechs and traditional banks alike are leveraging this framework to create smarter, more responsive financial ecosystems.
However, the long-term success of Open Banking depends on the sector’s ability to secure its foundations. Security is not a barrier to innovation — it is the enabler.
Without trust, there is no adoption. Without resilience, there is no sustainability.
By proactively addressing API vulnerabilities, enforcing best practices, and adopting modern security architectures, financial institutions can ensure Open Banking remains both innovative and secure — a system that empowers consumers without compromising their data.
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