Embracing the future of real-time bank connectivity with APIs

There is no doubt about it: the era of “real-time everything” is upon us. It’s already taken hold in our personal lives – in how we bank, travel, shop and more – and is rapidly extending into our business lives. We may not see it working in the background, but we see it in the results that appear instantly at our fingertips when we interact with clients, communicate with vendors, and most importantly, when we work with critical data that supports our businesses.

Is real-time data really that important to your business success?

Simply put, yes. Batch processing is the arch nemesis of corporate finance and treasury departments because it does not deal with data dynamically, meaning data is not delivered until the “batch” is scheduled and therefore is not the most current.

That may not be a problem with data that can be reviewed and reconciled on a longer-term basis, but what about data that informs functions that drive bottom-line results, like payments? Or clearing exceptions? Or funding decisions and outcomes?

These critical functions are the lifeblood of corporate treasury and finance, impacting company financial results on a daily basis.

What bank APIs mean for corporate treasury

Corporates use bank APIs for one or more of the following four main reasons: speed, optimisation, security, or cost efficacy. In turn, operations become more efficient, funding becomes more actionable, timely and cost effective, and data security becomes airtight, reducing fraud risk.

In addition, regulations such as the Revised Payments Services Directive (PSD2) create an environment ripe for innovation in areas like payments, where real-time is ushering in a massive shift.

“Real-time everything” using bank APIs provides treasurers with the same ease, flexibility, and control available in the consumer experience. That API environment is based on underlying technology that frees banks and corporates from the restrictions inherent in operating on a legacy system, where even the slightest change to features or functions can have widespread, sometimes damaging effects on the whole system.

With APIs, this real-time environment allows treasurers to create an agile, responsive direct relationship that intersects with ERP and bank partners, without impacting the core technology and within the airtight security structures already in place for these systems.

Though bank APIs are not new, some treasury departments have been slow to adopt them, questioning whether real-time bank data visibility is the game changer it claims to be. Others assume integrating and managing multiple bank APIs will be complex and time consuming, eliminating the claimed value they bring. Increasingly, a better understanding of their benefits, the emergence of bank API data aggregators and maturation of finance's overall digital vision make these concerns a thing of the past.

Perhaps most importantly for the CFO and treasurer, the plug-and-play nature of bank API technology is one of its most potent benefits. Treasury does not need to install new systems, because bank APIs can be easily integrated into existing systems and set up for automated activities.

Peeling back the layers surrounding bank APIs

Bank APIs transform the treasury role in organisations to a more strategic function, by:

1. Changing the “push-pull” of staggered data synching typical with host-to-host and other third-party connections by creating a continuous information loop that translates data into action;
2. Increasing liquidity optimisation benefits with real-time data, even when centralised mechanisms like cash pools, in-house banks, or sweeps may already be in place;
3. Offering simplified ways to safely connect proprietary systems without heavy IT involvement;
4. Maximising machine learning-enabled apps due to the continuous data flow with real-time data and bank APIs; and
5. Creating a robust data platform, based on ERP-embedded apps and bank APIs, that increases the speed and efficiency of treasury, providing never-before available data like payment status, detailed payment tracking and transaction fees – all in real-time. No more stale data or best guesses. No more waiting for an acknowledgement for a critical M&A payment.

How to get started

For corporates looking to build bank API integrations quickly and seamlessly, partnering with a fintech provider can simplify and accelerate the process. At Citrix, a global Fortune 1000 company that builds secure, unified digital workspace technology, selecting FinLync’s suite of ERP-embedded apps and bank APIs allowed them to power their treasury and finance teams without making a significant IT investment to build technology themselves.

Citrix group director and assistant treasurer Bruce Edlund notes that in evaluating potential fintech partners, Citrix looked for endorsements and partnerships from established banks, due partly to their rigorous due diligence requirements. A fintech that passes muster with a large global bank is much more likely to have the experience and stability necessary to support ongoing corporate treasury functions.

Through its partnership with FinLync, Citrix is integrating its bank and ERP data, allowing its corporate treasury team to benefit from real-time payments, balances, account information and status, machine learning-assisted reconciliation the same day as transactions, and more certainty for urgent payments – all while being protected by the latest enterprise-grade security. Evaluating the “build vs buy” is your first step in the process.

For information to ask your vendors, check out questions you should consider when evaluating bank APIs.

Why bank APIs matter: the future of bank connectivity

Bank APIs provide direct connectivity for deep integration, eliminating the limitations of legacy technology by embedding incoming multi-bank data directly into your system of record.

Removing these barriers between the ERP and banks opens new doors for analysis and data harmonisation, reducing manual tasks and allowing treasury to focus on its core work while adding direct value to the company’s bottom line.

Though bank APIs and API aggregators will render host-to-host connectivity obsolete, it won’t happen overnight. But the trend is clear: bank APIs are quickly becoming a core component of the finance organisation’s modern technology architecture.