NACHA's API Standardization Industry Group (ASIG) has launched an online community to support the development and adoption of standardized APIs across the financial services industry. It has also released two standardized APIs for testing that have the potential to greatly benefit corporate treasury.
Developed in collaboration with Accenture and Google, the online community allows industry stakeholders to access information, tools and resources, as well as test standardized APIs. George Throckmorton, managing director, network development and strategic initiatives at NACHA and ASIG lead, called the launch “a big step forward" in ASIG's effort to further API standardization. "Through this resource, we hope to further development efforts, foster adoption, and support deployment—all in an effort to better meet the evolving needs of the financial services industry," he said.
Coinciding with the launch of the online community is the release of two standardized APIs for testing. The first is ASIG’s Account Validation API, which helps to ensure that bank accounts are valid and payments are posted as desired.
“Account validation for billers, corporates and anyone who is originating ACH transactions and even other payment types has been a high priority,” Throckmorton said at Faster Payments 2018 in April. “How do I eliminate administrative returns that I get from the account number being incorrect? How do I validate before I initiate a payment? There are many options for account validation today, including the ACH network, but this is an opportunity for us to standardize how those work.”
Throckmorton added that if a corporate wanted to validate all of its accounts across the United States or globally, it would be a huge advantage to have one standard implementation. “I wouldn’t have to choose for each one and rebuild from scratch,” he said. “That is one of the benefits of standardization.”
ASIG also launched the Get Bank Contact Information API, which allows originating financial institutions to find and alert the appropriate individuals at the receiving banks of potential fraud. Throckmorton noted that while this APIs is for bank use, it can benefit corporate treasurers as well. “Imagine a corporate calls their bank and says, ‘I think I’ve had fraud occur on the account.’ So an investigation ensues and yes, there has been fraud. The first thing that needs to happen is to contact the financial institutions where that money has gone to, so it doesn’t go down the mule accounts and can’t be recovered,” he said.
Throckmorton noted that in today’s environment, that process is very manual. But with a standardized API, the process is simplified. “One system talks to another, and the phone number is laid right in front of me so I can call that bank and stop those funds,” he said.
ASIG initially identified 16 API use cases for development; Account Validation and Get Bank Contact Information were selected to be the ones released first for industry testing. ASIG is exploring proof-of-concept adoption projects with a number of global organizations to test and validate the APIs.
“Industry engagement is a key component to our continued success,” Throckmorton said. “From participation to testing to adoption—it is all important. This engagement, coupled with structured and transparent governance, will help ensure an effective development and API life cycle to support standardization into the future.”
ASIG encourages industry stakeholders to visit the online community to learn more about its standardized APIs and test them. The site also features a forum for discussions and feedback, as well as provide updates on new API standardization efforts.
“This is a great example of how new technology can help address pain points for corporates and financial institutions,” said Magnus Carlsson, AFP’s manager of treasury and payments. “The standardization of APIs for the financial industry is going to be vital going forward and these two areas are a great start.”