Corporates drive API innovation

Published: Sep 2023

Treasurers are making greater use of application programming interfaces to improve financial information flow, particularly those focused on maximising the value of their ERP systems.

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Treasury appetite for exploring API solutions for real-time bank balance/transactional information and payment status updates continues to grow. There is also increasing acceptance that the business case for custom development is weak, pushing treasurers towards solutions offered by treasury system vendors or the major cash management banks.

“Especially for cloud solutions, vendors leverage the API technology in trade platform integration and bank connectivity for payment order transfers, cash balance updates and payment status updates,” observes Michal Šárnik, Senior Manager at Zanders.

In many cases, treasury teams are leveraging a TMS or ERP in combination with dozens of banks spread across the globe and need APIs to help streamline the flow of information between these banks and their back office systems, explains Joerg Wiemer, Co-founder and CSO of TIS.

“But because API development within the ERP environment has been slow and connecting with dozens of individual bank APIs is difficult for corporates to manage on their own, sometimes the easiest approach is to leverage the APIs of a third party,” he says.

According to Šárnik, integration with ERP platforms is still rare. However, one of the most interesting applications of APIs at multinational healthcare company Fresenius is between its SAP ERP system and the company’s self-administrated data lake.

“Prior to the API we used the upload and download function for Excel-based files,” explains Christopher Zimmermann, Head of Treasury Operations at Fresenius. “Now we have highly automated Power-BI reports based on our data lake, where we store and process data from various sources and databases.”

The company has discovered that the timeframe for installing, testing and implementing an API varies widely. The implementation referenced above took less than three months, whereas for another API the complexity involved means it could take ten months or more to find a suitable solution.

“Apart from the financial benefits, the time saving and improvement in data quality and availability are significant,” says Zimmermann. “When looking at our liquidity management, for example, we can monitor our cash position in various currencies with all our banks very closely and even reduce the minimum cash that is needed for operational activities. In addition, many tasks were previously either non-existent or had to be performed manually.”

Citi client Toyota Financial Services (the North American captive finance arm of Toyota) has built a centralised platform by compiling an API stack to enable subscription management, billing and payment services for end customers including customer and merchant onboarding. The APIs have been designed to be payment processor and customer/merchant agnostic.

“When Toyota entities are preparing to integrate with the platform they can access and set up all requisite APIs within just two business days for testing and validation,” explain Jyoti Swain, Domain Information Officer Treasury, Billing & Payment and Arindam Das, Information & Digital Systems Toyota platform Factory Owner.

The APIs help Toyota Financial Services businesses scale more effectively by allowing them to add new features or services without the need for extensive internal development, facilitate secure access to data stored in different company systems, and create personalised and integrated experiences for customers across websites, mobile apps and third-party platforms.

“Toyota platform APIs are a foundational element of our digital transformation efforts, enabling us to modernise legacy systems, adopt cloud technologies and embrace new digital business models,” adds Swain.

James Krikorian, Vice President and Treasurer of Krispy Kreme Doughnuts explains that his global treasury has evolved over the six years since he joined the company.

“At that time I was responsible for the US and UK equity markets – now we are in more than half a dozen countries as far afield as Australia, New Zealand and Japan,” he says. “When we started to really take control of cash it was clear that I needed some technology and after assessing a number of global banks and fintechs we decided to go with Trovata.”

Reinforcing the message that this would be a long-term commitment was an important first step. “It is hard enough managing treasury on a daily or weekly basis, never mind longer-term,” says Krikorian. “I made it very clear that if we were going to invest in APIs, we would have to execute a multi-year contract not unlike those we have with our global banks.”

Krispy Kreme now uses APIs for all its cash forecasting globally across multiple banks and currencies.

“It is essentially a data lake, like a search engine for banking transactions,” he adds. “Banking platforms are not particularly suitable for searching for transactions. These APIs essentially harmonise and consolidate where our banking data is kept and enable us to search back not just days or weeks but years to meet the demands of external and internal stakeholders.”

The implementation process was pretty straightforward in that all the heavy lifting was done by the fintech and Krispy Kreme’s domestic bank. The value lies in the forecasting mechanism of using past flows to predict future flows.

“Our business is pretty predictable,” says Krikorian. “We are in the doughnut business so Fridays tend to be busier than Wednesdays, for example, and I use this real-time data to inform future cash flows. Short, medium and long-term forecasting used to take up a lot of my time – now I can periodically stress test it to make sure nothing has changed, which is important for a company that is experiencing double digit organic growth.”

The APIs enable the collation of data from the host of foreign entities the company has with different banks around the world into a single data lake.

“The primary benefit is having an accurate cash forecast because money is expensive,” says Krikorian. “I happen to be in a debt position, so I never want to have cash hanging around unnecessarily and the way to achieve that is by having optimal cash and by definition optimal forecasts.”

The company’s next objective is to create a single ERP system globally to further unlock some of the benefits of shared services and notional pooling.

“When I started we had roughly US$650m of global revenue – today we are over US$1.5bn,” says Krikorian. “I don’t have any more resources than I did six years ago, but I have better processes and partners that can allow me to fit more volumes and flows through sturdier pipes.”

Expense management solution vendor Moss uses APIs from Deutsche Bank for payments and real-time reporting to automate internal and customer-requested transfers.

“Working with fintechs as payment service providers we are used to easy-to-understand API documentation and sandbox environments to ease implementation,” says Maximilian Traugott, Head of Business Operations. “With Deutsche Bank being a global bank with the resulting legacy systems we were braced for a tough ride and indeed the API documentation was more complex, technical and sometimes opaque, while required deployments might happen within a week rather than a day. However, the extremely hands-on support from the project and technology teams meant the implementation took no longer and weekly touchpoints, clear tracking of open to-dos and sparring more than balanced the points mentioned above.”

The benefits include maximising customer control over both their funds and spend, and the time saved by the internal payment operations team who can now focus more on value adding tasks, such as monitoring and ongoing improvement of the payment platform.

The above examples – and the following comments – underline the scale of the battle for API leadership.

When it comes to APIs, banks build the best that they can. However, these software interfaces tend to have a lot of issues and don’t move very fast. That is the view of Brett Turner, CEO of open banking platform Trovata, who says this creates a number of issues for companies that want to get information directly from their banks.

“The banks are saying the only way to do that is if companies build the APIs themselves, which they are never going to do,” he says. “In many cases they get hardly any IT resources to begin with and their company is not going to spend three or four months and then implement an ongoing programme to continue to update and manage those APIs.”

The focus of the API development programme at FIS is on connectivity with solutions that treasury departments can benefit from, for example establishing API connectivity between its risk management and treasury solutions. “Externally, we have worked with banks, trading platforms and rate providers to streamline client connectivity,” explains Steve Wiley, VP Treasury Solutions.

TIS plans to further expand the number of APIs it offers with third-party systems and banking partners. Its other priority is to extend the benefits of these APIs to areas such as the automation of direct debits, recurring payments and cash pooling or sweeping. “We have also just introduced a new tier of APIs for vendor master data screening that can directly exchange sanctions screening and security data with corporate ERPs and banks,” says Wiemer.

ION Treasury has been focused on expanding the API in Wallstreet Suite so customers can more easily get data out of the risk management system and into business intelligence tools.

“We have also re-engineered our treasury and risk management solution to be a set of independent components that share data through APIs and created an integration hub to sit between third-party applications and our treasury management systems,” says Chief Product Officer, Michael Kolman.

One of Fiserv’s key initiatives involves the migration of all its API products into a unified portal for everything from API discovery and trial to credential management and support services explains Alvin Cho, VP of Product & Engineering, Digital Innovation & Transformation.

From a bank perspective, Patrick Langeveld, open banking expert at ING refers to an uptake in demand and implementation from Nordic clients exposed to an advanced payments system, while Philippe Penichou, Global Head of Sales, Wholesale Payments & Cash Management at Société Générale says corporate interest has grown strongly over the last 12 months.

“While fraud prevention is a key topic, the ability to make urgent payments outside of the normal workflow done via standard ERP procedures is more broadly interesting, mainly for marketing reasons in the B2C space,” adds Penichou.

Deutsche Bank recently launched an API that enables automatic validation of beneficiary details in real time, before a payment is executed observes Kerstin Montiegel, Global Head Client Access & Services at Deutsche Bank. “Our most recent API clients come from the insurance sector, life sciences and automotive,” she says. “Real-time treasury is increasingly becoming mainstream.”

The accessibility and packaging of API connectors has room to grow for corporates according to Bob Stark, Head of Market Strategy at Kyriba. “However, the digital footprint of a corporate treasury app is becoming lighter and we will continue to see progress as treasury teams are presented with more opportunities to use an API instead of legacy data transfer methods,” he concludes.

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