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API Advantages: Real-Time Processing & Visibility for Treasury

  • By Andrew Deichler
  • Published: 8/9/2017

API
What’s an application programming interface (API), and why should treasury professionals care?

APIs can help organizations move from batch processing to real-time processing—music to the ears of many treasury professionals. Now, treasury APIs are gathering momentum following the adoption of the Revised Payments Services Directive (PSD2) in Europe. The directive’s goal is improving competition in banking and payments in the European Union. But since the implementation, APIs have begun to find their way into corporations and banking outside of Europe.

“PSD2 mandates that banks open up their platforms through APIs to payment services providers and account information service providers to be able to initiate payments or provide account information,” said Bob Stark, vice president of strategy for Kyriba. “That’s where it all started; it forced banks to publish APIs and connect to technology providers that want to specialize in initiation and delivery of payments. Many expect this will open the door to new ways of sending payments.”

What’s an API?

Broadly speaking, APIs help programmers build better software applications more easily. One popular API is the Google Maps API that lets developers easily embed Google Maps on web pages.

Some banks see open APIs as differentiators because they provide faster connectivity mechanisms than what is currently in use. APIs have the potential to move corporates beyond the batch process for payments, eventually allowing for a real-time connection. “A common complaint for treasury teams has been that they want real-time visibility of banking activity within their cash and treasury management platforms,” Stark said. “APIs offer the opportunity to make intraday reporting into real-time reporting.”

The thirst for this information varies among organizations. But oftentimes banks will only offer first and second presentment in their intraday reporting. For treasurers to check on particular transactions, they may have to actually go into the bank portal because the bank isn’t providing that visibility quick enough via BAI or MT reporting. But API connectivity will offer more, once banks are in a position to leverage its potential. “That’s where it becomes more interesting for treasury—not just for bank reporting, but also for instant visibility into payment confirmations and eBAM processes,” Stark said.

SWIFT gpi

SWIFT’s global payments innovation (gpi), which went live earlier this year, relies on APIs to provide banks’ corporate customers with faster, more transparent and traceable cross-border payments. A special tracking feature provides treasurers with a real-time view of their transactions, which includes confirmations when payments are credited to recipients’ accounts. Additionally, gpi’s transparency ensures that remittance information is transferred unaltered to recipients.

“The tracking service is a cloud-based service which uses ISO 20022 APIs to reach all the banks in the chain,” said Harry Newman, global head of banking of SWIFT, during a recent conference session on gpi. “It enables you to track, end-to-end, a transaction.”

At the same session, Todd Roberts, senior vice president of enterprise innovation for CIBC, stressed the importance corporate treasurers place on visibility. “Corporates expect greater certainty and information about the transaction,” he said. “Greater information about the process is unquestionably important to them in terms of how they manage their business.”

Of course, like anything, adoption of gpi will take some time. Roberts believes the biggest barrier to corporate adoption is the complexity of integration. To that end, SWIFT and its bank network need to have an eye on connectivity between parties, using efficient, modern infrastructures like APIs to facilitate that connectivity.

Learn more about APIs and other innovative technologies that are infiltrating treasury in the new Treasury in Practice guide, Fintech: Breaking Down the Barriers, underwritten by Kyriba. Download the guide here.

Copyright © 2017 Association for Financial Professionals, Inc.
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