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Treasury teams and technology departments have historically had a sometimes painful relationship as a mishmash of banking services and lengthy platform integrations meant that treasurers often faced sub-optimal information and processes.
This is all changing though with Application Programming Interfaces (APIs) and Open Banking, creating a new, efficient way for corporate treasurers to interact with their banking counterparties and empowering them to add even more value to their business.
The plug and play capabilities of APIs improve treasury’s flexibility
Treasury platforms of the future will be API-based. The Treasury Management System (TMS) remains at the core, while treasurers can integrate add-on services in API format in a “plug-and-play” manner, meaning that new features can be up and running within hours or days rather than requiring weeks, months or even years to be implemented.
The increased speed of implementation via APIs also improves the flexibility to tailor a solution as required, empowering treasurers to scale their operations much more quickly in order to fit their business expansion. While, for example, entering new markets and geographies would previously have caused most treasurers a headache trying to timely implement necessary cross-currency solutions, APIs permit for a new product - or new features as well as updated versions of an existing product - to be added quickly and at a much-reduced cost.
Equally, treasurers and their banking partners can easily eliminate features of software, if they’re no longer needed, helping to keep complexity at a minimum and avoid creating legacy architecture.
APIs can help maximise working capital
In the past, despite a number of smart software and innovative technology solutions offered by banks, treasury teams had to make do with fragmented financial data, mainly due to bank accounts being held across a number of jurisdictions and with different banks.
In the new world of Open Banking, via APIs, banks or other so-called Account Information Service Providers (AISPs) can now consolidate bank account statement data and deliver it in a single interface, allowing corporate treasurers to obtain their balance and transaction information from around the globe in real time. Real time account information comes with significant benefits: It will enable corporates to maximise their working capital and manage their liquidity more efficiently.
Collaboration feeds innovation
With now over 135 entities approved so far by the Financial Conduct Authority (FCA) to offer services that use Open Banking and APIs, open, collaborative innovation is becoming the new norm: Banks and fin-techs, while competing, are also partnering in order to offer their target groups comprehensive digital solutions.
The API ecosystems that are emerging can facilitate next-generation versions of traditional banking processes such as account verification, credit scoring and Know-your-customer (KYC) checks as well as new capabilities such as virtual bank accounts. These services will further boost treasurers’ agility.
At the same time, banks have embraced the chance to replace complex legacy systems with best-in-class platforms, featuring interoperability, modular system design, API management, and cloud computing.
NatWest Markets, part of NatWest Group, is one of the banks undergoing a bold technology transformation and is also playing an active role in NatWest’s Open Innovation initiative: With global scouting teams, innovation labs, hackathons and its “Open Experience technology solutions centre” in Edinburgh, known as OX, NatWest is bringing start-ups and other partners together in order to build a cross-industry ecosystem capturing the smartest ideas, which can help transform banking services and customer experiences.
FXmicropay API exemplifies how APIs transform payments and foreign exchange
NatWest Markets’ FXmicropay solution is one example of an API that integrates seamlessly into the business processes of corporate treasurers and can be installed easily and quickly, delivering pricing for corporate customers in over 90 currencies and converting foreign currencies received from cross-border transactions back into a treasurer’s chosen currency, based on guaranteed FX rates.
The service has also been directly integrated into SAP Commerce Cloud and Magento 2.0, making it even easier for corporates with e-stores to use the certified plug-ins (available from the SAP and Magento app stores) to integrate automated cross-border pricing onto their website in a matter of hours.
What’s more, by leveraging virtual account technology, FXmicropay negates the need for new currency accounts to receive cross-border funds and is a great example of how treasurers can start to leverage plug-and-play technologies to transform and enhance their business.
An exciting future ahead for API connectivity
API based treasury platforms have only just started their journey. Today’s API functionalities are solely supporting single products and functions: An FX API, for example, may be used for FX conversion, but beyond that the integration can be limited.
In the not too distant future, however, APIs will amalgamate into “gateways”, which will offer a whole suite of treasury services. Treasury and finance functions will be able to pick and choose from a menu of APIs ranging from FX, accounting, lending, credit, hedging and risk management to design spectacularly bespoke services themselves.
This will create huge opportunities, but will also require treasury functions to become ever more tech-savvy and IT literate.
If you want to find out more about API supported treasury services and/or FXmicropay, please contact our team: FXmicropaySales@natwestmarkets.com
UK: +44 (0)20 7678 1000
US: +1 203 897 3967