Lingering issues of trust and a foggy regulatory climate continue to hold up B2B adoption of faster payments among financial institutions (FIs), but nothing can hold it back. Momentum is a powerful force, and it looks like there’s enough of it behind open banking to finally clear the paper jam from B2B payments, making way for faster more accurate digital operations.
The February 2020 B2B API Tracker, powered by Red Hat, provides an immersion in the topic, as application programming interfaces (APIs) are increasingly layered onto the legacy payments infrastructure, creating a new central nervous system for digital transactions worldwide.
Nimbler FinTechs Hook Up
Cautious by nature and slow-moving by design, legacy FIs fret about open banking architectures that lower the drawbridge for FinTechs. For their part, the latter are repurposing and repackaging bank rails furiously and making inroads. As more FinTech solutions take hold, suspicion between players is fading as things move manifestly toward fast digital money.
A change in perspective helped. FinTechs are nimbler than the IT departments within most banks, and it’s allowed them to visualize and iterate in ways that we don’t usually associate with banks. What has emerged are exciting new ways to access and monetize banking services.
The latest B2B API Tracker gives numerous examples of how this is playing out. Trade and treasury solutions provider BNP Paribas, for example, is profiled for its hearty embrace of APIs, especially when it comes to instant money uses.
“The benefits of APIs for instant payments [are] huge,” said Charlotte Hausemer, vice president of innovation and product management for trade and treasury at BNP Paribas. “What we do with instant payments and APIs is offer 24/7 [access to bank] services. [Real-time] gives eCommerce traders and [business-to-consumer] retailers instant access to their funds [for] working capital and liquidity-related benefits. As more countries implement instant payments, it offers treasurers new ways of working, moving from batch processing into … real-time.”
FIs, SMBs, Fintechs Eying Each Other
Banks and FIs are getting more comfortable with real-time environments as detailed in several use cases from the B2B API Tracker, like Sage Intacct’s experiments in API-driven accounting, cost management and automation. And Australian challenger FI Judo Bank is using APIs to integrate with smart credit solutions, loans and compliance capabilities for small and medium-sized businesses (SMBs).
While they work to gain trust with financial institutions on one side, FinTechs are also having to convince SMBs, who are not all that keen to hand over financial data. A report by the U.K.’s Federation of Small Businesses (FSB) found that less than 15 percent of British SMBs share data with FinTechs, with the holdouts citing privacy and competition concerns.
Among bright spots detailed in the B2B API Tracker are the many ways that platforms have taken to the API revolution. While eCommerce sites rely heavily on platform ecosystems, not everyone needs all services all the time. FinTechs are doing what they do best, slicing off discrete pieces of functionality, building their own perfect beast, and leaving the rest.
API access to singular platform capabilities is called “headless commerce.” Expect to hear more about it as APIs find their way deeper into banking and B2B payments.