APIs are booming in Corporate Treasury - here's why
Kyle Boag, Regional Head of Global Liquidity & Cash Management for HSBC in the Middle East, North Africa and Turkey reflects on the impact of APIs on Treasury in 2021.
Corporate Treasury Blog
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In this article, Kyle reflects on the impact of APIs on Corporate Treasury: |
Kyle Boag is Regional Head of Global Liquidity & Cash Management for HSBC in the Middle East, North Africa and Turkey. Kyle joined HSBC UK in 2004, before moving to the Middle East in 2015. Prior to his career in banking, Kyle was a Warfare Officer in the Royal Navy for eight years.If corporate treasury is to have a buzzword for 2021, or more accurately an initialism, it will most likely be ‘API’. Application Programming Interface will be, if it’s not already, the must-have tool for corporate businesses and the wholesale banks that support them, as the competitive race to scale up digital efficiency continues.
Known as the “digital glue” in corporate and treasury finance, APIs offer an interface that connects two software components and allows them to communicate with each other, resulting in faster and more secure connections of different data sources. Or, to put plainly, APIs provide a digitally-improved end customer service or need.
Examples of how APIs relate to our everyday lives are the consumer apps we use every day. APIs allow us to find, order and pay for goods and services, receive order confirmations and track delivery in real-time. Some of the most popular service companies of the past few years, such as food delivery, ride-hailing, and courier services, have been delivered on an underlying web of APIs. In fact, in the last 10 years the API economy has been driven by many of the world’s biggest tech companies – Amazon, Google, Facebook, and co – and it continues to grow exponentially.
Across the MENA region API use is booming with Bahrain, Oman, Qatar, and the UAE leading the demand. Egypt is expected to come online with API use this year, with the rest of the region to follow in 2022.
Where corporates are concerned, APIs help organisations to compete in the digital economy by removing barriers to integration between businesses, enabling faster scaling and providing increased revenue potential.
Why do they matter and how do they work?
Fundamentally, APIs offer real world solutions to more traditional business processes that, especially in the Covid affected world, are no longer best practice. Organisations today need to manage their business in real-time with even greater levels of transparency and predictability, especially as payments are moving at ever faster rates both within countries and across borders.
For corporate treasury, the advantages of APIs focus around speed, productivity, and security. The ability to make instant payments with end-to-end tracking and receive near real-time acknowledgements across single and bulk payment initiations, can save hours – even days – of waiting time, and open up new markets and clients. Another huge advantage for international companies is the ability to scale and process large amounts of receipts in different currencies, and have these funds available for immediate use.
Having a foundation of core APIs can modernise a business and streamline internal processes. It’s also a great place to start for companies looking to upgrade their business model with a digital architecture. For innovation focused companies in particular, using digital solutions to enhance the customer experience is crucial and removing time-consuming reconciliations and manual procedures will be well received. Ultimately, how quickly a business can accelerate its most time costly processes will see it either leapfrog the competition or be left behind.
APIs in banking and treasury
APIs are not new in banking – previously they have been used to link multiple internal systems together – but they are being used in more diverse ways. A common use today is to enable clients to link from their infrastructure directly through to the bank’s, replacing the front-end detail with the client’s own user interfaces.
The global pandemic presents an opportunity to leverage new opportunities and refine business models. This is certainly true for treasurers, who need real-time access to global information to support liquidity management and cash flow forecasting, as well as for digitising payments and collections processes.
Modern banking partners should be offering an API service. Even for corporates whose back-office system is not digitally native, using APIs is a great way to begin competing in the digital economy, whether they are an SME or an established multi-national organisation.
With the increase in API use across consumer and business industries, companies will begin seeing an increase in customer expectation of its benefits, and demand API integration from their banks. As in our personal lives, we all want instant access to our data and to experience frictionless journeys; we don’t expect to have to input the same data multiple times, or switch between applications to complete a process.
Businesses that embrace APIs will be modernising themselves for these customer expectations and their future needs, as well as futureproofing themselves for new directions of growth.
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