A myriad of hurdles are preventing corporate treasurers from utilising or even adopting bank APIs. Despite becoming increasingly common, APIs are still not universally standardised, with banks often having slight differences in how they transmit data.
“What we realised is [banks] all have a different approach and different way of transferring data,” said Janko Hanh, head of treasury operation at Autoneum Management, an automotive parts supplier when speaking at BAFT’s annual meeting.
“Many banks are completely developing [APIs] on their own. That is a big burden for the client because they cannot go for automation and standardisation on their side.”
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Part of the problem stems from the fact that APIs are not financial sector specific, with them traditionally more widely used by members of the tech industry.
“It’s not easy for banks to go and govern those standards with technology companies and fintechs and say ‘you need to adopt for this and that, like we do for ISO XML or MT messages,’” said Mario Benedict, head of API and digital product solutions for EMEA at JP Morgan.
For specific uses like account management and liquidity planning, many treasurers still prefer to use bank portals rather than APIs. One reason for this is that they are more comfortable with tried and tested methods but also the fact that many firms lack the necessary tools to make use of real-time data.
“A lot of the clients struggle to consume that data,” Benedict said. “What do I do with that data? How do I consume it in my ERP or TMS?”
He added that banks will need to work or partner with ERP and TMS providers if APIs are to become more widely adopted by firms.
“The banking community need to work together with the TMS [providers]. Ultimately, until they make it easier to consume the data, the adoption is going to be challenging for our corporates.”
Benefits of APIs
Despite these hurdles there are real tangible benefits of APIs, one of which is real-time visibility of accounts.
“[With real-time visibility] you make your liquidity and cash flow decisions based on real-time data rather than prior date data,” said Benedict.
With the re-emphasis on cash forecasting and liquidity management, real-time data will be key in informing the treasury department.
“The faster you see the balances around the world, the faster you can react,” said Hanh. “That’s always the hurdle of each treasurer, the discussion between you centrally and the CFO sitting on money locally.”
Though it may be challenging to integrate APIs into treasury processes, Hanh believes it serves as a good reflection point in how to improve the department.
“It’s always good to step back and say hey, what could we do better? Shouldn’t we improve? Fast access to information could be a catalyst for digitalisation. It again is an enabler to rethink how you’re doing things in your treasury department.”
He added that having access to more real-time data has changed the discussion he has with finance teams in other offices.
“We have this information that allows for a completely different discussion with the finance team.”
“It helps us understand the business, to increase transparency, access information much faster and improve discussions with stakeholders internally.”