Project Description

Wall clock and currency symbols shows the businessman. The concept of time is money.
APIs (application programming interfaces) are everywhere—in our searches for the best hotel room rate through an online booking site, in our tracking of a pickup from a ride-sharing service on a map—and payments and finance is one of the fastest-growing categories of API use. The reason is simple: Every business makes and receives payments, and every business needs to track and manage financial information. With expanded connectivity, APIs are helping treasurers automate and simplify back office processes, enabling them to facilitate better decisions and improve financial controls.

The evolution and accessibility of APIs

In the simplest terms, APIs provide real-time connectivity to accomplish a task through a secure connection between two systems. They provide a controlled environment to share data and conduct transactions. With APIs, companies can build transformative new products or embed new features into existing systems.

Financial services APIs have been around since the early days of computing, but with the emergence of mobile computing, there has been a “democratization” of API technology, and now greater opportunity to connect your company’s systems directly with your bank. APIs can work with any operating system, machine, or mobile device, standardizing access and allowing apps to easily communicate with each other. You can track financial data and initiate transactions, all within the digital experiences of your choice. Where it was once complex, time-consuming, and expensive to integrate two systems, today’s web APIs make integrations simple and cost-effective, allowing companies of all sizes to benefit from this technology. In short, APIs bring the bank to you.

As a treasurer, you don’t need to know the details of how APIs work. You just need to look across your processes for pain points that APIs can alleviate. View a check image in your treasury workstation, track current balances before initiating a payment from your enterprise resource planning (ERP) system—there are many possibilities to create value for your company.

Efficiency gains

Almost all technology does its best work when it is making people more efficient. APIs for treasury departments are no different.

Tasks like reconciling accounts and managing financial position can be time-consuming and complicated, and they leave room for error. Too much time is spent navigating different systems and ensuring that the appropriate financial controls are in place and going to different systems, applications, and bank websites to manually bring data into one platform. APIs can embed data and features into existing systems, helping save the treasury department the cost and hassle of training employees on new systems, and setting up new user rights and approval flows. The end result drives efficiencies while making individual employees and the overall department more nimble.

Bank APIs are changing these back office processes. They empower the treasury function to bring data into one interface and make it quickly available throughout the department, rather than taking additional steps and jumping between platforms. After the APIs do their work, your team can do theirs—quickly making decisions, finding status for a wire transfer, or viewing and reconciling a transaction. Everyone has more time to focus on strategic tasks.

Back office automation

For institutions with more complex processes, tasks such as cross-border transactions or hedging currency risks can be automated through APIs, adding layers of efficiencies that free up employees to focus on other crucial parts of their jobs.

Say that you are a large company with operations in multiple countries. If you have deployed a system to track and manage your foreign currency needs, you can connect this system to your bank’s foreign exchange platform using APIs. Your system can then directly request foreign exchange quotes and initiate trades. You can set thresholds and trading ranges in your system to automate a large number of standard tasks, while still controlling risk by requiring a human operator’s input for out-of-pattern transactions.

The automation of data sharing allows treasury departments to operate in near real time.

Instead of waiting minutes or hours to log in and obtain transaction data manually, APIs provide near instant access to critical information.

But wait, there’s more

APIs are adding speed, convenience, and efficiency to back office finance operations, but they also offer much more. Companies can use APIs to grow their businesses and improve customer experiences. For example, an insurance company can, through APIs, pay out a claim directly to a customer’s debit card in near real time, driving a positive customer experience. No more need to cut and mail a check, then wait for it to clear or worry about whether it was misplaced in the mail.

APIs are the platform for innovation for treasury and finance departments. The benefits for those departments and for the companies they support are rapidly growing.

Article originally published on Treasury & Risk as “How APIs are making (and will make) the treasury function smarter” on June 28, 2018.