Banks are continually working to provide their business customers with more streamlined, impactful services.
They previously only interacted with clients in physical branches — accepting deposits and extending loans, for example — but such interactions offered little ability to facilitate customers’ primary business activities.
Payment and data application programming interfaces (APIs) are changing that, however. Relatively quick and painless integrations allow financial institutions (FIs) to embed their services directly into clients’ platforms, easing collaborative efforts and accelerating data flows between both parties. This enables banks to support their clients’ ventures in more robust and flexible ways, according to Abdul Raof Latiff, group head of the digital institutional banking group at Singapore-based DBS Bank.
“[Under] traditional-style approaches — where [a business client] basically tells the bank, ‘Can you make 50 payments for me?’ — banks do not typically get involved in the intricacies of the customer’s business processes and are usually only involved in posting transactions that need to be done,” Latiff explained in a recent interview with PYMNTS. “This is where APIs change the ball game. With APIs, we are now able to plug ourselves into our customers’ business and work with them at the front line to develop solutions to enhance their processes and customer journeys.”
Banks can offer APIs to power clients’ eCommerce launches, he said. Such solutions can also bolster countries’ payment digitization efforts and facilitate cross-border trade, and FIs are eager to provide them.
Enabling Digital Payment Acceptance
Businesses today integrate APIs into their eCommerce websites and mobile apps to automate payments, collections and refunds, which allows their customers to experience instant services. Engaging in the digital realm also creates new opportunities, Latiff said. Many insurers offer mobile apps that enable customers to purchase plans, submit claims, upload accompanying photo documentation and receive their funds digitally, for example, with APIs facilitating apps’ payment and settlement services.
APIs are applicable in many other sectors, too. Payment features can be embedded in platforms for everything from tennis court booking and parking space reservation to utility companies’ and commodity retailers’ websites. Even government services have been tapping banking APIs to more easily receive digital payments. These capabilities are especially in demand in Singapore — DBS’s home base — where the public sector continues to leverage technology to bring greater convenience to both consumers and businesses.
“Government entities are usually one of the largest users of cash and checks,” Latiff said. “But this has changed as we increasingly see government agencies leading the digitalization push.”
Singapore’s tax authority has been leveraging DBS’s banking APIs, which allow taxpayers to digitally transmit stamp duty taxes owed on property transactions, for example. Paper-based tax payments create frictions because payers cannot receive stamp duty certificates until their checks clear, but digital payments allow for instant receipt.
Making Money Move
Businesses of all types want to provide convenience, and FIs seeking to help them must first get an in-depth understanding of the clients’ priorities — such as those relating to fund settlement and reconciliation speeds, Latiff explained. DBS found that clients often yearn for real-time transfers in these cases.
“Cash flow is king to businesses, and everyone wants things done in real time, especially in a digital-forward country like Singapore,” he explained.
DBS supports this demand by offering an API connection to the city-state’s near-instant PayNow payments rail.
"In almost nine out of 10 cases … we will use the real-time payment systems’ infrastructure to be able to settle and pay a lot faster,” Latiff noted. “In Singapore and Asia, particularly, people live a mobile life experience. They want to be able to pay and go, and merchants dealing with people want money returned into their accounts instantly, too.”
APIs that leverage domestic payment rails cannot facilitate international money transfers, but the solutions nonetheless provide data flows critical to certain cross-border transactions. Latiff stated that APIs can help FIs verify far-flung companies’ identities, for example, establishing the trust required before trade financing can be extended.
“Where APIs are being used is when marketplaces become more international,” he said. “You will need APIs to be able to extract information related to buyers and suppliers, which can be processed by DBS’s alternative lending credit modeling. [This allows] us to quantify these [client] names [and] understand that these names are credit-ready because we know they have active [payment] flows — [including] how big or small a buyer they are and how they handle payments.”
These business history details ensure FIs feel confident that they will be repaid if they offer trade financing. Lenders can use APIs to easily and quickly receive necessary details, accelerating financing processes and enabling transactions to move forward.
Data and payment APIs are flexible tools that allow banks to branch out from only offering services in physical branches. They extend capabilities that can power clients’ digital transformations, including easy payment integrations into eCommerce platforms and data flows that support international trade. FIs can stay relevant and keep business clients loyal by offering the right APIs to fuel the latter’s domestic and global eCommerce goals.