The topic and use of APIs has grown exponentially during the past two years, as is the case with most of the latest gen tech, the typical discussion or implementation has been around consumer use cases (P2P, C2B). However, in our own coverage (see API Usage Expands in Corporate Banking and Payments, March 2018), it is clear that the corporate banking (wholesale, transaction banking) entities of institutions are adapting to the new normal. In this piece, appearing in Fintech Futures, the writer points out how the use of APIs ‘will soon come’ to treasury management.
‘While the near-term vision for APIs is to make existing technology easier to use and more efficient to access, the ultimate value of APIs will be the vehicle for the next wave of financial innovation. We are already seeing APIs serve this purpose in the consumer banking world, where APIs are incorporated in financial management tools like Mint to aggregate transactions from accounts at different banks as well as in peer-to-peer (P2P) money transfer apps like Google Pay or Venmo, which consists of a payments link API and a receipts API. In making it possible for nonbank entities to provide financial services, APIs are serving as a gateway for open banking.’
We agree but would point out that APIs are already being used in treasury, and it is really a matter of scale as well as breadth of reach across the banking asset classes. Generally speaking, larger organizations have been more adaptive to APIs, partially because of PSD2 and other open banking initiatives on foreign markets, as well as the advantages to client experience, a key theme for the sector.
‘For example, today treasurers interested in an integrated payments product, which would enable a bank to automatically set up wire service, ACH, or credit card payment upon receiving an ERP-generated payments file, must establish and maintain an SFTP connection. For most organisations, the cost is prohibitive. With a treasury management API, establishing this connection would be virtually effortless to implement and use.’
A good summary and worth a few minutes of your time.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group