In a digital ecosystem dominated by Open Banking, Open Finance,  and interoperability between platforms, APIs have become one of the most critical – and most attacked – assets of financial organizations. Weak authentication, reusable tokens, insecure redirects, or a poor implementation of OAuth have historically been vectors of fraud.

FAPI 2.0 (Financial-grade API 2.0) arises precisely to close these gaps. It’s not an isolated technology or a commercial product: it’s a highly stringent security profile, designed by the OpenID Foundation, to protect APIs that handle high-risk financial data and operations.

What is FAPI 2.0 and why is it critical today?

FAPI 2.0 is a security specification that defines how OAuth 2.0 and OpenID Connect should be used in financial contexts, eliminating insecure configurations and forcing robust cryptographic mechanisms.

Its main objective is to ensure:

FAPI 2.0 requires robust and cryptographically verifiable client authentication, completely eliminating the weak or ambiguous mechanisms common in traditional OAuth.

In practice, this involves:

• Mandatory use of mutual TLS (mTLS) or private_key_jwt to authenticate the client to the Authorization Server.
• A client identity tied to a certificate or private key, not an easily exfiltrable shared secret.
• Elimination of the use of  static client_secret in critical applications.

The result is authentication where  it is not enough to have a token: the customer must continuously prove that they are who they say they are, drastically reducing fraud by impersonation.

One of the biggest risks in financial APIs is that an attacker intercepts a valid token and reuses it.

FAPI 2.0 mitigates this scenario by:

• Sender-constrained tokens, where the token is cryptographically linked to the client who requested it.
• Using mTLS or DPoP (Demonstration of Proof of Possession) to prove possession of the private key associated with the token.
• Ban on reusable “pure” bearer tokens without context.

Thus, even if a token is intercepted,  it cannot be used by another actor, as it lacks the cryptographic key required to present it.

FAPI 2.0 is explicitly designed to neutralize well-known but still common attacks in misconfigured OAuth implementations.

• Replay attacks: These are mitigated by short-lived tokens, cryptographic binding, and strict validation of the context of use.
• OAuth mix-up attacks: These are prevented by the mandatory use of signed parameters (JARs) and clearly identified endpoints.
• CSRF (Cross-Site Request Forgery): Significantly reduced by requiring PKCE in all flows and strict state validations.

Overall, FAPI 2.0 doesn’t rely on the developer’s “good intentions”: it forces technical controls that block these attacks by design.

Modern financial ecosystems operate on complex architectures: microservices, multiple clouds, B2B integrations, and public APIs.

FAPI 2.0 ensures security consistency by:

• Clear and unchanging rules, regardless of the cloud provider or deployment language.
• Natural support for Zero Trust architectures, where every call must be authenticated and validated.
• Reduction of ad-hoc configurations between teams, regions, or vendors.

This allows security to be perimeter-dependent, but to travel with every request, every token, and every interaction, even in multi-cloud or hybrid scenarios.

FAPI 2.0 is not a simple “best practice”: it is a regulatory profile, designed for regulated environments where failure is not an option.

Timeline of evolution

Year	Version	Main focus
2016–2018	FAPI 1.0 Drafts	Initial adaptation of OAuth to open banking
2019	FAPI 1.0 Baseline	Minimum safety required
2020	FAPI 1.0 Advanced	Elevated security with MTLS and JAR
2022–2024	FAPI 2.0	Unification, simplification and maximum security

FAPI 2.0 eliminates multiple profiles and consolidates everything into a single, secure-by-design approach. No longer do you choose between “baseline” or “advanced”: now everything is advanced.

Main changes:

• Mandatory PKCE on all flows
• Strong client authentication by default
• Elimination of implicit flows
• Increased emphasis on sender-constrained tokens

FAPI 2.0 is not implemented from scratch. There are specialized providers that already support or are aligned with the standard.

• Auth0 (Okta)
• ForgeRock
• Ping Identity
• Curity
• WSO2 Identity Server
• Keycloak (with specific extensions)

These providers allow:

Providers that support FAPI 2.0 do not implement OAuth 2.0 in its generic form, but rather a hardened version, where optional configurations that have historically been a source of vulnerabilities are removed.

This involves, among other aspects:

• Disabling insecure flows as implicit flow.
• Mandatory use of PKCE, even in scenarios traditionally considered “safe”.
• Strict validations of redirect URIs, audience and scopes.
• Tokens with short life and strict turnover policies.

The result is a deterministic, predictable, and error-resistant OAuth, especially critical in financial environments.

In FAPI 2.0, OpenID Connect is no longer a flexible layer and becomes a highly normative implementation.

Providers apply controls such as:

• ID Tokens that are mandatorily signed, and in many cases also encrypted.
• Strict validation of issuer, audience, nonce,  and authentication context.
• Prohibition of partial or unsigned responses.

This ensures that user and customer identity cannot be tampered with during the authentication flow, even in the face of advanced brokerage attacks.

FAPI 2.0 is supported by a set of advanced mechanisms that providers must support natively:

• mTLS (Mutual TLS): Ensures two-way authentication between client and server, and allows tokens to be linked to the client’s certificate.
• JAR (JWT Secured Authorization Request): ensures that authorization requests are signed and complete, avoiding parameter manipulation.
• PAR (Pushed Authorization Requests): Eliminates exposure of sensitive parameters in the browser by sending the request directly to the Authorization Server.
• DPoP (Demonstration of Proof of Possession): modern alternative to mTLS for environments where the use of certificates is complex, linking the token to a private key.

Together, these mechanisms raise the level of security from the transport to the application layer, ensuring that every step of the OAuth flow is cryptographically protected.

Public Cloud and Modern Architectures

FAPI 2.0 is especially relevant in architectures:

• Microservices
• Zero Trust
• Multi-cloud
• Open Banking APIs

Layer	Typical Implementation
API Gateway	AWS API Gateway / Apigee / Kong
Authorization Server	FAPI Compliant IdP
Certificates	ACM / Azure Key Vault / GCP KMS
Observability	SIEM + Signed Logs

In the cloud, FAPI 2.0 is complemented very well by:

• Mutual TLS between services
• Service Mesh (Istio, Linkerd)
• Zero Trust Controls

Technical comparison

Technology	Security Level	Ideal context	Residual risk
OAuth 2.0 Standard	Medium	General APIs	High
OAuth + PKCE	Medium–High	Mobile apps	Medium
OpenID Connect	Medium	Web identity	Medium
FAPI 1.0	High	Open Banking	Low
FAPI 2.0	Very High	Critical Financials	Very Low

Key Difference

While OAuth allows for multiple configurations, FAPI 2.0 leaves no room for insecure decisions. Everything weak is forbidden by definition.

• Token replay protection
• Cryptographically Linked Tokens to the Client
• Drastic reduction in fraud

• Aligned with PSD2, Open Banking, Open Finance
• Facilitates audits and certifications

• Clear and homogeneous standard
• Less ambiguity for developers
• Lower technical security debt

Secure access to:

• Bank accounts
• Financial history
• Payment initiation

• Secure integration with third parties
• Fraud prevention in public APIs

• Strong Application Authentication
• Non-reusable tokens

• Cross-bank APIs
• Clearing, clearing and interbank payments

FAPI 2.0 represents the ultimate maturity of OAuth in financial environments. It doesn’t try to be flexible or friendly: it tries to be secure, predictable and resistant to real attacks.

For organizations that handle financial data, adopting FAPI 2.0 is no longer a competitive advantage, but a minimum condition of survival in a world where APIs are the new banking core.

Thanks for reading me!!! Happy new year!!!