January 19, 2024
4 min read

Managing Open Banking APIs with Kong


In the Open Banking ecosystem, Kong Gateway emerges as a pivotal tool. It ensures that financial institutions can comply with stringent regulatory standards and leverage the opportunities presented by this new, data-driven landscape. This article will cover an in-depth look at the open banking landscape.

Open Banking Standards and Demands

In the Open Banking ecosystem, Kong Gateway emerges as a pivotal tool. It ensures that financial institutions can comply with stringent regulatory standards and leverage the opportunities presented by this new, data-driven landscape. This landscape is characterized by:

  • Enhanced data accessibility: Open Banking mandates banks to open up access to customer financial data (with customer consent) to third-party providers (TPPs). This shift creates a landscape where data is more freely accessible, allowing for innovative financial services and applications.

  • Data interoperability: With standardized APIs, data can be seamlessly shared and integrated across different platforms and services. This interoperability is crucial for creating a cohesive financial ecosystem where institutions, TPPs, and customers interact more efficiently.

  • Open Banking at scale: Open Banking demands a scalable platform — for example one that will support authentication at 100,000 transactions per second (TPS) and much more.

  • Personalized financial services: The availability of rich, customer-centric data enables TPPs and financial institutions to tailor their services to individual needs and preferences. This can lead to more personalized banking experiences, better financial advice, and customized product offerings.

  • Data-driven decision-making: Financial institutions and TPPs can harness this wealth of data for more informed decision-making. This could range from risk assessment and fraud detection to market trend analysis and strategic planning.

  • Innovation and competition: The data-driven landscape fosters innovation as both established banks and new entrants can develop novel financial products and services. This competition ultimately benefits the consumer, offering more choices and potentially better rates and services.

  • Regulatory compliance and consumer trust: While data accessibility increases, so does the emphasis on privacy and security. Complying with regulations like GDPR and PSD2 becomes essential, not only for legal compliance but also for maintaining consumer trust in how their data is handled.

Kong’s role in Open Banking is multifaceted. Kong not only helps financial institutions manage the technical aspects of data sharing and API management but also ensures that this is done in a secure, compliant, and efficient manner. By doing so, Kong enables these institutions to fully embrace and capitalize on the benefits of a data-driven financial ecosystem.

Expanding Open Banking to Open Finance

Open Finance is emerging as being wider than Open Banking, enabling access and sharing of consumer data to even more financial products and services beyond banking. This includes loans, consumer credit, investments, and pensions. Open Finance vision is to enable wider integration of financial data with non-financial industries, such as healthcare and government.

Open banking was developed on the premises of many benefits such as providing better services, a personalized experience, and more transparency to consumers.  But it also comes with risks, especially around data privacy as financial data is shared with many entities. The risk of data breaches is heightened with the increase of access points to financial and sensitive data potentially left unsecured. 

As with all technological innovations, open banking openness must be balanced with data privacy and the risk of breaches so that its benefits outweigh its risks. Kong has been working with small and large banks for many years, helping them in their journey towards Open Banking by providing various capabilities.

Kong‘s Role in Open Banking

Facilitating Open Banking Standards

Kong simplifies the integration and management of APIs necessary for Open Banking, offering tools for Dynamic Client Registration (DCR) through the Kong Konnect Developer Portal, secure communication through Mutual-TLS Authentication, and comprehensive OAuth 2.0 support for managing access and permissions.

Stitching Together Legacy and Cloud Native Use Cases

While the banking industry is transforming at a lightning pace, many of the banking systems remain monolithic applications and are in need of a new microservices-based architecture and performant containerized ecosystem. As banks move toward microservices and Kubernetes, Kong provides a lightweight solution that can seamlessly align with multi-cloud and on-premises environments.

Provisioning for a Highly Performant Containerized Ecosystem

Kong can be leveraged to efficiently provision and manage high-performance runtimes across various cloud and on-premise environments. With Kong, banks can chart a course to expedite time to market for their customer-facing applications by scaling their containerized ecosystem.

Recapturing Development Efficiency

Kong’s deployment agnosticism, plugin architecture, and ingress controller designed to enhance service orchestration within containerized architectures enable and facilitate the move to microservices architecture that can result in operational savings. For example,First Abu Dhabi Bank has been able to increase the use of APIs from 200 to 500 while cutting operational costs by 57% and dramatically reducing the need for developers to write infrastructure code.

Evolving Partner Onboarding Experience

With Open Banking opening up opportunities for banks to develop relationships with third-party partners, customers have leveraged Kong as the outward-facing API gateway. The Kong Developer Portal acts as any organization's first point of contact with partner developer ecosystems — a one-stop shop to discover APIs and self-service subscriptions to drive smoother onboarding. This has enabled banks to test and pilot ideas faster with their fast-expanding ecosystem of partners.

Security and Compliance

A core feature of Kong is its robust security and governance capabilities essential to secure data handling and API management and for maintaining and simplifying compliance adherence to Open Banking regulations like PSD2 and GDPR. Kong offers mechanisms for managing sensitive financial data and ensuring secure data exchange between different financial entities. Some Kong features critical for Open Banking security include:

  • Dynamic client registration: Automating the process of TPP registration.
  • Mutual-TLS authentication: Enhancing security through verified client certificates.
  • OAuth 2.0 workflows: Facilitating secure and controlled data access.
  • Scalability and Flexibility: Kong has proven to be highly adaptable to the evolving needs of the Open Banking ecosystem.