Treasury transformers: APIs taking corporate banking to the next level

Published: Dec 2019

APIs are transforming treasury. By providing a cost-effective, frictionless technology experience across the piece, they can remove barriers to automation, solve common pain points and potentially deliver levels of system flexibility, agility and scalability that few thus far have imagined.

Developers laptop open with code displayed

Nadya Hijazi, Global Head of Digital, Global Liquidity and Cash Management and Business Banking, HSBC

Nadya Hijazi

Global Head of Digital, Global Liquidity and Cash Management and Business Banking

HSBC logo

Lance Kawaguchi, Managing Director, Global Head – Corporates, Global Liquidity and Cash Management, HSBC

Lance Kawaguchi

Managing Director, Global Head – Corporates, Global Liquidity and Cash Management

HSBC logo

There can’t be many treasurers who are yet to notice the arrival of the application programming interface (API) in this space. There is good reason to be au fait with this technology phenomenon. As a means of allowing two or more software applications to interact seamlessly, APIs are not just convenient; they open up a whole new world of real-time-enabled possibilities to which every stakeholder in progress can apply their imagination.

Saving time and money

In delivering real-time connectivity between bank and corporate, APIs offer the opportunity to capture data around transactions, almost as they happen. Data flow with unprecedented speed, transparency and seamlessness heralds the evolution of most day-to-day treasury activities. But APIs can also deliver transactional data, enriched above and beyond traditional SWIFT messaging content.

With more information, something as fundamental as reconciliations and payments exceptions management can be enhanced, saving time and money. Indeed, as the seamless and transparent banking experience is rolled out through APIs, it progressively removes treasury’s reliance on end-of-day batch processing and host-to-host connection with each bank, says Nadya Hijazi, Global Head of Digital, Global Liquidity and Cash Management and Business Banking, HSBC.

Without APIs, integration of the corporate TMS or ERP with a bank, supplier or other third party can require a heavy lift of technology, almost certainly demanding access to IT resources. Once that integration has been built, there is usually very little re-usability of those connections. For Hijazi, APIs offer a release from these chains, believing they give treasurers “an easier means of creating a much broader ecosystem”.

Leveraging connections

Published APIs can be consumed at will, enabling other services, even outside of treasury’s traditional sphere of reference, to be leveraged. Connecting services in this way delivers all kinds of capabilities that previously would have been costly and, in some cases, impossible. The idea that treasurers can re-use connections to create entirely new services is ground-breaking, says Hijazi. “When we talk to clients about different API use cases and opportunities, it’s a discussion always powered by how APIs can help them leverage new internal and external connections.”

The power of APIs is clearly demonstrated in the consumer space, where commercial apps are allowing users to easily find, order and pay for goods and services, providing order confirmations and delivery tracking, all in one place. Many of these apps are based on an underlying web of APIs, the app acting as the ‘one-stop’ aggregation of many different services, delivering a seamless service to the user. “In much the same way, we can help treasurers take advantage of this technology, reimagining their ecosystems, moving away from end-of-day processing towards real-time decisioning,” Hijazi explains.

Risk management

The highly sensitive nature of treasury data could be seen as a roadblock. It’s true that APIs are data-driven and create links to certain underlying systems. Hijazi is candid in her assessment: the technology itself is no guarantee of risk reduction. “Security is only achieved by understanding what risks those technologies are subject to, and then putting appropriate controls around those technologies.”

The immediate nature of API connectivity demands monitoring and response capabilities to match. Of course, help in creating the right security infrastructure should be sought for any new technology, but as Hijazi also points out, since APIs are built on seamless ‘open’ technology, they can be easily integrated with audit and analytics systems – helping to identify and manage risk exposures.

Implementation, flexibility and scalability

The integration of TMS or ERP platforms to banks’ host-to-host environments is complex and usually requires significant support for the treasury teams by the bank. APIs enable developers within the customers’ business greater self-service capability through the publication of technical API specification, automated exchange of tokens and the ability to begin the testing of the connectivity before engaging in the pre-production testing. This significantly reduces the implementation times and shifts the control to the corporate customers.

What’s more, the level of connectivity enables banks to expose more services and data to their corporate customers than a host-to-host channel which, is not easily consumable within a digital proposition. Of, course, treasury is unlikely to demand constant real-time information, and so the number of customer calls to banks’ infrastructure can be kept within “sensible realms” comments Hijazi. This, she says, makes API’s an entirely scalable proposition.

Setting standards

Currently, API development is not standardised amongst providers (not even PSD2 was prescriptive at this level). That said, HSBC worked with SWIFT, for example to define common API standards for its Direct Debit Fast payments API in Hong Kong which other providers will adopt. HSBC’s response to multiple standards has been to concentrate on the data within the API itself, standardising as much as possible around ISO 20022 XML v3.

Enhanced viewpoint

APIs for transaction reporting can give treasurers enterprise-wide visibility across their accounts. Real-time data opens up the prospect of enriched reporting; with beneficiary bank processing status and SWIFT unique end-to-end transaction references (UETRs), treasury can achieve higher reconciliation rates, says Lance Kawaguchi, Managing Director, Global Head – Corporates, Global Liquidity and Cash Management, HSBC.

Indeed, at the highest level, because APIs can help treasury monitor and maintain cash and liquidity positions across multiple accounts and banks, Kawaguchi believes that it really can position the treasury to be able to make more informed and timely decisions on its cash.

Essentially, APIs mean that information becomes available when treasury requires it, he explains. By allowing real-time information to be integrated into treasury processes, through the TMS or ERP, he notes that instead of waiting for periodic data flows from the bank, treasurers can request real-time information such as statements, transaction statuses or balances. “Having real-time data enables further automation and the removal of risk-laden manual and paper-based process. But it also establishes the structure necessary for on-demand instant payment initiation.”


What’s more, Kawaguchi feels that the prospect of real-time API-driven information raises the possibility of treasuries more easily deploying and benefiting from value-added services provided by banking partners.

As an example, when HSBC US Commercial Banking launched its Digital Partner Platform in early 2019, the aim was to deploy a series of APIs across an ecosystem that would make it easier for clients and third parties (such as fintechs) to access to HSBC’s products and services. One of the first offerings under this programme digitises commercial onboarding so that companies can directly apply for commercial banking accounts online. The aim is to begin rolling this out for cross-border account opening in select international markets.

With APIs allowing seamless integration between applications from different vendors, the notion of exchanging data directly – without the need for human interaction – is all part of creating a digital ecosystem that Kawaguchi says “will enable businesses to start building and delivering customer-centric propositions for their own customers”.

Enhancing relationships

By providing real-time control over the treasury data flow, and payments and reconciliation processes, APIs will also enhance the overall banking experience. As Kawaguchi notes, “just receiving an instant response when transferring money between accounts or sending payments to suppliers and partners would be a significant improvement for many treasurers.”

With APIs simplifying the connectivity between a bank and the corporate client’s TMS or ERP system, once integrated, real-time data flow will lead to fewer instances of ad hoc requests for information from the corporate to the bank. As Kawaguchi comments, where these requests have previously been made via email or phone (and this is still a common occurrence), it can sometimes create “unnecessary delays”. For corporates to be able to track their payments, and perform reconciliations, without having to wait for batch runs or contact the banks, it is a major benefit.

Treasury next steps

With APIs now at least on the radar of most treasurers, Kawaguchi believes that it is a good time to start talking to banking partners about their API roadmap. “APIs are here to stay, and treasurers must ensure that their banking partners have a strategy in place to optimise the opportunities available to them,” he advises. Of course, to be truly effective, that banking partner’s API strategy must match its own footprint, he adds. “Only that way will clients gain a consistent experience, regardless of geography.”

Besides gaining a deeper appreciation of current treasury processes, through mapping and analysis, he urges corporate treasurers to begin exploring the processes and drivers within other functions within the business. By doing so, it will ensure an understanding of where bank-hosted APIs can streamline transaction flows between the corporate and its own customers. With scope for re-usability of connections at almost every turn, the limit of possibilities stops only with the imagination.

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