Companies seeking to implement the latest technologies and software solutions demand strong information technology (IT) skills, but firms’ IT teams may be forced to carefully split their time between departments if there are not enough experts to go around. Treasury departments aiming to make the most of their IT team members’ packed schedules may therefore be wise to identify solutions that require little time to adopt and maintain.
Application programming interfaces (APIs) are often integral to solving such problems, according to Bridgit Chayt, Fifth Third Bank senior vice president and director of commercial payments and treasury management. The Cincinnati, Ohio-based financial institution (FI) holds $171 billion in assets and has found that providing strong API offerings appeals to large business clients that frequently need customizable, easily adoptable solutions. Chayt recently explained to PYMNTS how an API-centric strategy helps FIs better support corporate clients with solutions that allow them to hit the ground running.
Fast, Ready Adoption
Fifth Third Bank has seen the most API interest among its larger corporate, upper middle market clients, which Chayt said typically have well-developed IT departments ready to work with the APIs. Such companies often manage a variety of banking portals, which challenges their treasurers because they must pull data from each source without accidental duplications or manual errors. Treasurers’ preferred APIs help them automatically pull that information and display it on one dashboard, Chayt said, which means FIs should provide API-based solutions that easily integrate into treasury workstations and enterprise resource planning (ERP) solutions.
Treasurers prefer APIs for their ability to support specific payments and transactional data services and also because firms’ IT department specialists can use them to quickly get new functions up and running.
“Opening up the architecture for API use really accelerates [treasury departments’ abilities] to bring those opportunities into their own treasurers’ offices and realize the benefits much sooner than they would [otherwise],” Chayt said. Treasurers “compete for IT time with whatever their [company’s] core business is … and oftentimes are a bit further down the [IT priority] list in their own organization.”
Chayt noted that she also sees APIs pushing treasurers toward practices that could further save time. APIs encourage digital payments and could finally shake B2B payments free from paper checks, she suggested.
APIs appeal to companies by offering modifiable and adaptable solutions that extend beyond off-the-shelf products. Fifth Third has seen particular API demand from verticals such as commercial real estate, healthcare and retail, where clients value adopting industry-specific software and workstation supports. Rather than be forced to accept only their banks’ offerings, such clients often wish to assemble their own customized services with APIs from multiple financial institutions, Chayt said.
“The ability to put some best-of-breed solutions together — to collect those APIs — ensures [corporate clients] aren’t making [choices] based only on industry expertise with their banks; they can assemble solutions from various sources,” she said. APIs “allow us to provide certain pieces of the solution to the [clients] … and they can leverage [our strong opportunities] in their own environments. Before, they may [have been] choosing Bank A or Bank B’s solution — now they have a bit of both.”
Chayt said banks will increasingly need to embrace clients’ desires for individualized offerings.
“Netflix talks about the fact that there are 33 million versions of Netflix because they have 33 million customers, and that’s how configurable the environment needs to be in order to grow and acquire new clients,” she said. “While I don’t know [whether] that one-for-one [ratio] is where a bank environment will end up, the ability to version what we offer in a way that’s scalable and easily consumable by our customers will [differentiate and change the game] for banks and how they maintain [their commercial customer relationships].”
Companies in fields such as healthcare and real estate — and their corporate treasurers — are unlikely to return to legacy solutions that restrict service options and take longer to implement, so APIs are becoming all the more important. FIs are increasingly offering APIs to extend services in flexible, easily adoptable ways that are critical for modern corporate clients.