Treasury in transition: real time payments to APIs

Published: Sep 2023

When it comes to corporate cash management, processes that were fast and efficient a decade ago are too cumbersome to compete effectively in today’s world where speed is a competitive advantage. To truly operate as a digital treasury, major changes must be managed. Switching from batch processes to real-time processing; from office hours to instant processing 24 x 7, from paper-based payments to instant payments.

In the latest example of a technology shift, Application Programming Interfaces (APIs), software intermediaries that allow two applications to ‘talk’ to each other, are moving out of the test lab and into the mainstream. Using APIs, treasury management systems (TMS) can potentially connect to multiple banks and other systems such as Enterprise Resource Planning platforms (ERP), allowing payment instructions, account details, and other data to flow seamlessly between them.

It has, of course, been possible to connect TMS and ERP systems to banks for many years; but whereas setting up a secure file transfer protocol (SFTP) connection could take up to ten business days, an API connection can be switched on rapidly if it is already in the system’s ‘library’ of API connections.

As API connectivity is being developed, it is already part of the solution to a multitude of integration challenges across the industry. In treasury operations, many organisations are seeking to replace batch processing and host-to-host connections with real-time processing, as well as better real-time visibility into account balances, faster negotiation and booking of FX rates, and many other examples of real-time connectivity.

Innovation in payments

It’s been just two years since corporates were able to immediately send and receive payments using the first new clearing system in the US in more than 40 years. Real-Time Payments (RTP) made business easier with anytime availability, sender and receiver notifications, and enhanced messaging, albeit with new challenges around security and audit.

Now ISO 20022 is the international standard for high-value payments. In November 2022, SWIFT will switch from the MT message format derived from the ISO 15022 standard to the MX message, based on ISO 20022 (though the two will coexist for some years to come). The newer format can carry rich data, making it much easier to know what a given payment was for and where it originated.

Treasury teams with a digital mindset will already be looking at systems and processes to see how best to take advantage of this new world of speed and transparency.

Fortunately, Bank of America is ready to share the heavy lifting. The CashPro API partnership network has developed strategic partnerships with industry-leading ERP and TMS systems, making it easy, quick, and efficient to connect to data sources anytime, anywhere, and anyway the treasurer wants. Many TMS and ERP systems are already connected, and more are being added.

If you haven’t yet investigated how APIs can help your treasury team move into the future, now’s the time. For a closer look at two of our applications powered by CashPro Reporting API, please explore the CashPro API Developer Portal.

Keep an eye out for next month’s Thought for the Month

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