Enhancing Financial Security: Navigating the SR 21-14 Recommendations for API Compliance

In the dynamic realm of digital banking, the imperative to grasp the comprehensive landscape of APIs has become a pivotal concern for financial institutions. With technological advancements and increasing collaborations with fintech entities, unmanaged APIs not only pose security risks but also present regulatory challenges.

The recently released 2023 State of API Security Report by Traceable and the Ponemon Institute provides a global perspective, revealing critical vulnerabilities and their widespread consequences. Drawing insights from 1629 cybersecurity experts across the United States, the United Kingdom, and the European Union, the report underscores a substantial increase in API-related data breaches.

"60% of surveyed organizations reported at least one breach in the past two years, with an alarming 74% experiencing three or more incidents." Traceable.ai/2023-state-of-api-security

Beyond security, regulatory bodies, notably the U.S. Federal Reserve, acknowledge the significance of comprehending and documenting API inventories. The Federal Reserve's SR 21-14 guidance, issued two years ago, specifically addresses authentication and access to financial institution services and systems. Applicable to institutions supervised by the Federal Reserve, this guidance underscores the need to know and manage information systems, including APIs.

For financial institutions, compliance with SR 21-14[1] transcends a mere regulatory checkbox. During compliance audits, Federal Reserve examiners expect a clear presentation of IT assets and risk management practices. The lack of clarity on API landscapes not only poses security risks but also adversely impacts audit reports and compliance evaluations.

"In particular, the guidance highlights risk management practices that can support oversight of user and customer identification, authentication, and access solutions as part of a financial institution’s information security program." Federal Reserved SR 21-14

As the banking landscape shifts from traditional custodians of money to guardians of data and trust, transparency and control take center stage. This transition emphasizes the foundational role of trust in the financial sector, especially as banks navigate the complexities of managing vast volumes of digital data.

While various API marketplaces, such as Rapid API, Mulesoft, Axway Enterprise Marketplace, Backstage, and Postman, can address these concerns, the focus here is on the broader importance of API visibility and management. Large organizations, grappling with challenges arising from growing API usage, encounter siloed teams and fragmented enterprise architecture.

An API marketplace emerges as a valuable tool for addressing these challenges, offering financial institutions a unified platform for managing, discovering, and monitoring APIs. This ensures enhanced security postures, informed API decisions, and seamless navigation of compliance audits.

Whether leveraging an existing marketplace or developing a custom solution, the key lies in centralizing API management. This approach guarantees clear access controls, automated identification of non-compliant services, and the potential to treat APIs as products, even enabling monetization in the future.

As the financial industry embraces the data-centric era, understanding and controlling API landscapes stand as crucial elements for building and maintaining trust. Regardless of the chosen marketplace solution, the non-negotiable emphasis on visibility, security, and compliance remains integral to the evolving financial data ecosystem.

[1] https://www.federalreserve.gov/supervisionreg/srletters/sr2114.htm