Struggling with constant failed payments and operating with lack of cashflow visibility? That’s the problem that thousands of treasury professionals face on a daily basis, resulting in higher costs and loss of business opportunities.

 
When it comes down to it, one of the most needed concepts when operating a modern-day treasury department is having real-time information.

 

Enter the idea of applying APIs (application programming interfaces) between a company’s ERP (enterprise resource planning) system and a bank’s backend system to better facilitate instant information flow.

 

Although not a new type of technology, APIs usage is emerging as a game changing concept within corporate banking, which for the past few decades has opted to use host-to-host (H2H) connectivity to better embed themselves with clients.

 

Unlike a typical H2H setup where files such as MT940 are uploaded daily to a bank’s server and then processed, APIs allow for instant interaction between the two systems, reducing the time taken to process payments for instance.

 

APIs are not all equal and come in different forms, fulfilling different requirements for clients. For example, some APIs with a bank can provide simple services such as real-time account balance enquiry, while others can execute real-time payments/collections and FX bookings.

 

APIs can also extend beyond typical cash management functions to include instant online instructions for letter of credit issuance and account payables/receivables financing.

 

In addition to providing the treasury department with real-time information, API connectivity can also lead to a better customer experience for the overall organization.

 

Back in 2017, DBS partnered with insurance company MSIG to offer a real-time claims payment service supported by the API connection with the bank. According to the insurance company, travel claim processing was reduced from four days under the old system to real time.

 

This led to an increasing amount of insurance companies leveraging on this connectivity with the bank, with the Hong Kong division of Sun Life using API between DBS to connect to Hong Kong’s Faster Payments System (FPS) enabling seamless submissions of insurance claims.

 

Standard Chartered in India worked alongside petrochemical company Castrol in developing an API supported experience where customers of Castrol can easily track and redeem rewards by purchasing products which can be sent directly to the buyer’s Standard Chartered account.

 

Despite the benefits of increased API connectivity to banking partners, most CFOs and treasurers seemingly are not too excited about the solution.

 

That’s according to The Asset’s 2019 Treasury Review, which reached out to 800 CFOs and treasurers in the Asia-Pacific region and found that only 29% of them were interested to hear more about APIs, in contrast to technology tools around big data and artificial intelligence. This highlighted the fact that much education is needed to better inform companies about the overall positive impact of API connectivity going forward.

 

API banking opportunity
While treasury professionals stand to gain by embracing API connectivity within their organizations, banks themselves should increasingly look to incorporate APIs into their everyday internal processes to work better, not only with clients, but with third-party providers as well.

 

Electronic wallets (e-wallets) for instance have been seen as an ideal connectivity partner for banks to consider. From China’s Alipay to Southeast Asia focused GrabPay, the growing user bases of these providers in making electronic payments for goods and services shouldn’t be ignored. Likewise, banks should be able to connect and process payments coming from government backed payment infrastructures such as Hong Kong’s FPS or Singapore’s PayNow.

 

Adhering to constant treasury professional’s demands for greater cash visibility several banks have adopted omni-channel solutions whereby they act as the middle entity from the company aggregating and organizing all the flows coming in from multiple payments sources. This is especially helpful for companies operating in the retail sector as they generally have to process and reconcile payments from a variety of sources. This service likewise is useful for companies active in markets with a diverse payment landscape such as Vietnam where there is 28 licensed e-wallets.

 

“Emerging Asia made a significant contribution to record growth in global non-cash transactions volumes. Widespread adoption of digital wallets, increased success of e-commerce platforms and innovation in mobile payments are driving the phenomenal growth in the emerging Asia region,” highlights commentary from the World Payments Report 2019.

 

In addition to being able to help treasury professionals with their cash management activities, the bank’s willingness to open itself to third-party platforms via API can have positive impacts for trade finance/supply chain services as well. On top of using the bank’s system showcasing one part of a company’s supply chain there is a much-needed demand for interoperability with other notable trade platforms such as GT Nexus and Bolero aiming to offer a seamless experience for the end-user.

 

It appears to be only a matter of time before much of the connectivity between businesses and financial institutions are mostly going to be based on APIs. It is something that regulators in some key markets are hoping to encourage under the overarching philosophy of open banking whereby APIs allow third-party developers to build applications and services around financial institutions.

 

The European Union was one of the first jurisdictions to encourage participation of non-bank players such as payment providers in the formal financial space under the PSD2 (Second Payment Service Directive). In Asia, other markets followed suit with the HKMA establishing an open API framework for banks to follow to ensure that their customer’s data is being handled correctly. Singapore’s MAS (Monetary Authority of Singapore) conversely has created a financial industry API register to guide third-party providers connecting with traditional banks.

 

“We expect that as regulators consider ways to promote lower costs and better products for consumers, as well as improved system efficiencies and controls, open banking will likely become the norm in most Asian markets,” notes a McKinsey & Company whitepaper titled “Future of Asia.”

 
Though mostly focused on addressing opportunities in retail banking, the concept of open banking will certainly make its way into corporate banking as treasury professionals, like retail customers, demand real-time visibility and straight through processing from their banking partners across an eco-system of providers.Struggling with constant failed payments and operating with lack of cashflow visibility? That’s the problem that thousands of treasury professionals face on a daily basis, resulting in higher costs and loss of business opportunities.

When it comes down to it, one of the most needed concepts when operating a modern-day treasury department is having real-time information.

 

Enter the idea of applying APIs (application programming interfaces) between a company’s ERP (enterprise resource planning) system and a bank’s backend system to better facilitate instant information flow.

 

Although not a new type of technology, APIs usage is emerging as a game changing concept within corporate banking, which for the past few decades has opted to use host-to-host (H2H) connectivity to better embed themselves with clients.

 

Unlike a typical H2H setup where files such as MT940 are uploaded daily to a bank’s server and then processed, APIs allow for instant interaction between the two systems, reducing the time taken to process payments for instance.

 

APIs are not all equal and come in different forms, fulfilling different requirements for clients. For example, some APIs with a bank can provide simple services such as real-time account balance enquiry, while others can execute real-time payments/collections and FX bookings.

 

APIs can also extend beyond typical cash management functions to include instant online instructions for letter of credit issuance and account payables/receivables financing.

 

In addition to providing the treasury department with real-time information, API connectivity can also lead to a better customer experience for the overall organization.

 

Back in 2017, DBS partnered with insurance company MSIG to offer a real-time claims payment service supported by the API connection with the bank. According to the insurance company, travel claim processing was reduced from four days under the old system to real time.

 

This led to an increasing amount of insurance companies leveraging on this connectivity with the bank, with the Hong Kong division of Sun Life using API between DBS to connect to Hong Kong’s Faster Payments System (FPS) enabling seamless submissions of insurance claims.

 

Standard Chartered in India worked alongside petrochemical company Castrol in developing an API supported experience where customers of Castrol can easily track and redeem rewards by purchasing products which can be sent directly to the buyer’s Standard Chartered account.

 

Despite the benefits of increased API connectivity to banking partners, most CFOs and treasurers seemingly are not too excited about the solution.

 

That’s according to The Asset’s 2019 Treasury Review, which reached out to 800 CFOs and treasurers in the Asia-Pacific region and found that only 29% of them were interested to hear more about APIs, in contrast to technology tools around big data and artificial intelligence. This highlighted the fact that much education is needed to better inform companies about the overall positive impact of API connectivity going forward.

 

API banking opportunity
While treasury professionals stand to gain by embracing API connectivity within their organizations, banks themselves should increasingly look to incorporate APIs into their everyday internal processes to work better, not only with clients, but with third-party providers as well.

 

Electronic wallets (e-wallets) for instance have been seen as an ideal connectivity partner for banks to consider. From China’s Alipay to Southeast Asia focused GrabPay, the growing user bases of these providers in making electronic payments for goods and services shouldn’t be ignored. Likewise, banks should be able to connect and process payments coming from government backed payment infrastructures such as Hong Kong’s FPS or Singapore’s PayNow.

 

Adhering to constant treasury professional’s demands for greater cash visibility several banks have adopted omni-channel solutions whereby they act as the middle entity from the company aggregating and organizing all the flows coming in from multiple payments sources. This is especially helpful for companies operating in the retail sector as they generally have to process and reconcile payments from a variety of sources. This service likewise is useful for companies active in markets with a diverse payment landscape such as Vietnam where there is 28 licensed e-wallets.

 

“Emerging Asia made a significant contribution to record growth in global non-cash transactions volumes. Widespread adoption of digital wallets, increased success of e-commerce platforms and innovation in mobile payments are driving the phenomenal growth in the emerging Asia region,” highlights commentary from the World Payments Report 2019.

 

In addition to being able to help treasury professionals with their cash management activities, the bank’s willingness to open itself to third-party platforms via API can have positive impacts for trade finance/supply chain services as well. On top of using the bank’s system showcasing one part of a company’s supply chain there is a much-needed demand for interoperability with other notable trade platforms such as GT Nexus and Bolero aiming to offer a seamless experience for the end-user.

 

It appears to be only a matter of time before much of the connectivity between businesses and financial institutions are mostly going to be based on APIs. It is something that regulators in some key markets are hoping to encourage under the overarching philosophy of open banking whereby APIs allow third-party developers to build applications and services around financial institutions.

 

The European Union was one of the first jurisdictions to encourage participation of non-bank players such as payment providers in the formal financial space under the PSD2 (Second Payment Service Directive). In Asia, other markets followed suit with the HKMA establishing an open API framework for banks to follow to ensure that their customer’s data is being handled correctly. Singapore’s MAS (Monetary Authority of Singapore) conversely has created a financial industry API register to guide third-party providers connecting with traditional banks.

 

“We expect that as regulators consider ways to promote lower costs and better products for consumers, as well as improved system efficiencies and controls, open banking will likely become the norm in most Asian markets,” notes a McKinsey & Company whitepaper titled “Future of Asia.”

 

Though mostly focused on addressing opportunities in retail banking, the concept of open banking will certainly make its way into corporate banking as treasury professionals, like retail customers, demand real-time visibility and straight through processing from their banking partners across an eco-system of providers.