Deutsche Bank explains what treasurers should know about APIs.
Even treasury professionals who know that API stands for application programming interface and that so-called open APIs have been touted as the future of payment technology may not really understand what an API is or why it matters for treasurers and their bankers. So a presentation by Deutsche Bank at NeuGroup’s Global Cash & Banking Group (GCBG) first-half meeting gave members both a refresher course and a deeper dive into APIs and why they should care about them.
Mega messengers. APIs enable one system to connect to another, acting like messengers, looping requests to one system and responses back to the originator. In many cases, APIs are being used to transmit information to and from bank portals. Deutsche Bank expects more than three-quarters of banks will have invested in API or open banking initiatives this year, pushing this technology further into the cash operations space.
Timing is ripe for treasury applications. Yes, APIs have been around for what seems like forever. But new regulations, better technology and a competitive landscape have all advanced the cause of using APIs to create faster, more efficient customer experiences. For treasury, this means more real-time payments and faster reconciliations. Additional benefits include payment tracking, push payments and “requests-to-pay,” various risk management features (i.e., counterparty verification and KYC data) and alternative payment methods (i.e., paying into a “wallet”).
Interoperability with SAP. The presenter said Deutsche Bank is working with SAP to create an app so services offered by the bank can be plugged into a corporate’s ERP/TMS. Apps are downloaded from a marketplace and installed on the ERP or made accessible from the ERP through the cloud. That lets clients work with Deutsche Bank directly within the ERP, allowing them to, for example, select invoices, pay automatically on the due date and track all payment flows for these invoices.
What’s next? One member indicated that SWIFT already uses APIs, so it feels as if she’s moving backwards if she sets up separate APIs with each of her banks. Deutsche Bank’s presenter was quick to point out that the flip side is that using bank APIs allows for faster, real-time communication across the board for better cash visibility. He stressed that BAI payment files will not change, just the communication surrounding the initiation and completion of payment.
Bye-bye bank portals? One member asked if Deutsche Bank saw the use of APIs eventually replacing direct use of banking portals and was, perhaps surprisingly, answered with a “yes!” The happy prospect of a possible future without bank portals ranked high on more than one member’s key takeaways from the meeting.