API connectivity and automation
Another important technological development changing the payments landscape is the rise of APIs. While these are not a new technology per se, APIs are being put to use in novel ways in the treasury space and have the potential to significantly improve payments processing and more.
Eder elaborates: “APIs are essentially the glue that enables systems to interact seamlessly, in real-time. Treasurers can now use payment APIs to initiate payments from their treasury workstation, without needing to log in to a bank portal. With the correct parameters in place, this can even be done in an automated fashion, and significantly reduces the need for manual intervention – and limits the room for human error or fraud.”
APIs also offer the convenience of retrieving information when its needed, rather than having to wait until its received, says Eder. “We’re seeing more use cases emerge, especially as real-time account information, such as balances and transaction reports, is becoming even more critical for forecasts as the cost-of-living crisis bites, and inflation eats away at margins.” What’s especially great about APIs, she believes, is the ability to aggregate them into a single dashboard. “A treasurer can, in theory, ping all their global banks for their account information, and it will be instantly delivered to their dashboard and consolidated. In turn, this can provide a huge boost to critical, on-the-spot, decision-making.”
In addition, APIs can reduce manual back-office work since information can be directly integrated into the ERP or TMS. Eder continues: “One area of promise is faster reconciliations on the back of APIs in combination with RPA, AI and ML. And the quicker a corporate can reconcile, the quicker it can gain access to its liquidity.”
Moreover, being able to retrieve information on demand thanks to APIs can help a business to grow more rapidly, because it can make decisions when it needs to – rather than being beholden to out-of-date processes. What’s particularly exciting, says Eder, is that these functionalities are available to SMEs as well as large corporates. “The playing field is becoming increasingly level,” she enthuses.
Maqsood is also a keen proponent of APIs, and he believes they have brought about a step change in the FX industry. “Where once accurate FX rates came only through a Reuters or Bloomberg terminal, now live rates are streamed on mobile devices. APIs have been very disruptive to FX rates, contributing to many improvements in the level of transparency, availability and awareness,” he notes.
Furthermore, APIs enable more efficient and faster FX executions. “For corporate treasurers, this is highly relevant because they can access solutions enabling them to not only obtain live rates with transparency but also to instruct the corresponding FX and payment transactions,” he explains. “For a corporate treasurer executing bulk supplier payments in multiple currencies, for example, using an API solution enables them to obtain pre-transaction transparency around the FX rate. They’d be able to instruct that FX and payment in an integrated workflow, reducing the workload, and enhancing reconciliation and reporting.”