In the post-COVID world, small- and medium-sized enterprises (SMEs) and larger corporates have much to gain from increased connectivity and straight-through access to supply chains and ecosystems. Banks have a unique opportunity to step up and support their corporate clients’ (especially treasurers’) increasingly complex needs through Open Banking and application programming interfaces (APIs).
Corporate client expectations and needs are more intricate than those of retail or SME banking customers—they need:
- Real-time information access,
- Status updates on balances and payments,
- Straight-through and real-time processing of transactions,
- Reduced integration and process complexity,
- And intelligent multi-currency liquidity management solutions.
- All of these can help them to offer improved services to corporate clients and further extend their ecosystem and reach.
Corporate treasurers are increasingly viewing access to treasury and cash-management APIs as must-haves to improve their operational capabilities, reduce risk and better serve their business.
Traditional industry interfaces, such as EBICS and SWIFT, usually provide transmission and processing of payments and account information through batch processes which are delivered at set times or at end of day. Additionally, platforms like SWIFT tend to be cost-prohibitive for mid-sized and smaller firms.
Treasury API services for corporates, on the other hand, can initiate payments from treasury management systems (TMS) and enterprise resource planning (ERP) systems, and fetch and optimise cash positions based on the real-time needs of corporates. They can provide updates on payment status, cash balance, foreign exchange rates and transaction history in real-time. They are also easier and cheaper to integrate into the existing TMS and ERP systems used by corporates.
Incumbent banks such as Citibank, J.P. Morgan, DBS, Bank of America and Wells Fargo have already launched treasury and payments APIs and are benefitting from them. They are:
- Growing new revenue streams by monetizing enhanced services for corporate clients;
- Capturing real-time data to inspire data-driven decisions by corporate treasury or commercial sales teams;
- Resolving issues in reconciliation promptly to improve straight-through processing rates in payments and collections;
- Scaling services to improve operational efficiencies and lower their internal cash management risk.
To stay relevant to corporate customers and grow in the post-pandemic era, it is time for banks to follow in the footsteps of leading players and rethink the way they address the needs of large corporations.
In my next post, I will share some of the success stories of market leaders in Open Banking and treasury APIs. Please feel free to contact me with questions and feedback.