To some, application programming interfaces, or APIs, may just seem like another industry buzzword. In reality, however, they offer significant process efficiencies and strategic opportunities for treasurers – and represent an exciting digital future for the banking industry, says Tom Durkin, Head of Global Digital Channels, Global Transaction Services, Bank of America Merrill Lynch.
Why is there so much interest in APIs at the moment and why should corporate treasurers pay attention to this innovation?
It’s important to note that APIs aren’t actually a new technology; they have been around for years. What’s changed is that the underlying programming languages that enable APIs have become much more robust and developer-friendly. That, coupled with an increase in regulation around open banking, most notably the Payment Services Directive 2 (PSD2) in Europe, has fuelled innovation and interest in APIs.
Since APIs will significantly change the banking landscape and the way banks interact with their customers, just as they have caused seismic shifts in other sectors, APIs deserve to be on the treasurer’s agenda. Think for a moment about the seamlessness of apps such as Uber, which leverage APIs to integrate with services like Google Maps and various payment interfaces. Now imagine that type of functionality in a corporate banking environment.
With the treasurer’s authorisation, one relationship bank will be able to use APIs to link to another bank and collect information to create a consolidated view of the company’s cash positions, or even make payments from an account held at another other bank, all through one portal. This has long been a treasurer’s dream, but APIs are now helping that to become an achievable reality.