What Corporate Treasurers Should Know About Banking API's

The Massive Shift to Real-time Everything

Katherine Manning November 16, 2020 Banking

corporate-treasury-api

With new regulations such as the Revised Payments Services Directive (PSD2), allowing for more innovation in payments, corporate treasurers can make a move from batch processing to real-time environments. APIs can offer speed and convenience to corporate treasuries. 

In fact, two of the fastest-growing types of APIs are in finance and payments. In terms of cash positioning, APIs can update account balances in real-time, all the time. Using an ACH API, banks can send payments to vendors, customers, and employees at aunty time. Besides, an account validation API can be used to accept new customers immediately. APIs are ushering in the massive shift to real-time everything.

Corporate treasurers move to real-time processing

Corporate treasurers despise batch processing. However, APIs can transition batch processing to real-time processing. Further, with the adoption of PSD2 in Europe, APIs have garnered even more momentum. PSD2 facilitates more competition in banking within the EU and mandates that banks use APIs for payments and account services. It’s critical to note that APIs have been around for years. They’re increasing in popularity not just because of the PSD2 but also because underlying programming languages have become more robust. It’s really about composable banking and optimizing agility, freedom, and speed.

Dig deeper into APIs

APIs are designed to help build better applications. Banks can use APIs to facilitate faster connectivity than what has been used in legacy environments. A common complaint among corporate treasurers has been the lack of real-time visibility into cash and treasury management platforms. APIs can convert reporting into real-time reporting. Using BAI or MT reporting forces corporate treasurers to have to search for updates within the bank portal. Yet, APIs can offer immediate reporting on eBAM processes and payments. Here are other areas where APIs can initiate real-time everything:

  • Consumer payments on debit cards
  • Account validation
  • Check image retrieval
  • Account balance and transaction detail
  • Foreign exchange rates
  • ACH and wires payment and status

Moreover, there are specific ways APIs can innovate corporate treasuries:

  • Application communication — Reduce human errors, and improve speed by linking communication between systems.
  • Improve speed — Operate 24 hours a day with digital communication and immediate updates.
  • Manage the volume — APIs are scalable. As a result, they can reduce employee workload while increasing efficiency around managing large volumes of payments and inquiries.

Transition to real-time everything

Banks do not need to install new systems. You can easily integrate APIs into existing systems and set up a configuration for automated activities. You can also create “buttons,” such as a button to “locate the FX rate.” APIs can also be used to offer real-time reporting for vendors. 

The benefits of treasury APIs

APIs are only getting better. For instance, an account API can incorporate alerts that treasurers can set when an account meets a specified balance or set up a payment API to execute after invoice approval—APIs help streamline processes and workflows. Treasurers don’t have to count on an already-burdened IT department to help with a multi-month SFTP implementation. Instead, APIs offer flexibility without the need to include ongoing maintenance. In addition, APIs can be added to what you already have, so you don’t have to change business rules or learn a new system. So then, APIs should be on the banking agenda. Treasury dreams can become a reality. Corporate treasurers can also make crucial cash management decisions since receipts and payment data can be provided in real-time. Corporate treasurers can also reconcile positions more quickly and stop fraud more rapidly. The increased visibility means corporate treasurers can offer more strategic value.

Another benefit is that APIs can integrate reconciliation tools to improve efficiency. Banks can use APIs to feed real-time data insights and analytics into any system. Corporate treasurers won’t have to analyze and organize data manually. While PSD2 has enabled the fintech revolution, it has also motivated traditional banks to become more competitive and the increasing adoption of QR codes. Banks can then count on improved flexibility with bespoke dashboarding. 

What about security?

APIs add a layer of protection since the transfer process only includes small packets of relevant data – the information is never completely exposed to servers. APIs act as intermediaries for sharing data between applications. Additionally, it is vital to encrypt all data. APIs can be used to enforce data encryption. Moreover, APIs do support standardization to help augment compliance. Since APIs are so robust, they enhance the deployment of strict governance practices. Corporate treasurers can use APIs to create tiered sets of controls. For example, if an app misbehaves, the software can be automatically disconnected.

Moreover, APIs can be used to enforce privileged access. IT and technology budgets aren’t going away. Today, the greater focus is around breaking down silos while increasing scalability and flexibility.

Plan for APIs

In terms of the customer experience, APIs offer deeper integration with current systems and decrease turnaround times for customers. Not only will it lead to innovation, but it will also improve engagement with consumers who are used to digital platforms and expect immediate gratification.

Invariably, APIs are a game-changer and offer clear benefits for treasury management products and services. However, corporate treasurers must be willing to keep an open mind and let go of legacy systems and practices. Acceptable treasury practices are about improving the company’s bottom line. In that sense, APIs are the key.

Final thought

As a corporate treasurer, the good news is you don’t have to worry about understanding exactly how APIs work. All you have to do is use APIs to address pain points in your processes. Learn how Processmaker’s industry-leading low-code platform can help you shift to real-time everything.  View a video of our account opening and treasury origination solution:

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