B2B Payments

In Corporate Treasury, Apps Are Out, APIs Are In

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API technology isn’t new, but all of a sudden, the world of FinTech seems to be flocking to the tool as a way to expand the financial services offered to corporates. Anis Rahal, CEO of treasury management firm TreasuryXpress, has been a vocal proponent of API technology in recent months.

In earlier statements, Rahal has dubbed 2016 the year of the API revolution, and 2017 is certainly keeping with that trend. Citi, for instance, recently revealed an API for its corporate treasurer customers, a way for these clients to link treasury and ERP solutions straight into Citi. Standard Chartered launched its own banking API portal earlier this year as a way for developers to use Standard Chartered technology for their own solutions built towards the bank’s corporate customers.

“Just a couple of years ago, the trend was to build applications for treasury,” said Rahal in a recent interview with PYMNTS explaining the rise of APIs in corporate banking. “Now we are talking much more about APIs, and I have the impression that the API is taking a leap over applications.”

TreasuryXpress is the latest B2B FinTech gearing up to release its own API solution. For Rahal, API technology can address some of the long-lasting challenges in treasury management. For instance, treasury management systems may include a slew of apps, from payments to cash forecasting, grouped together into a single system. But there’s a better way for treasurers’ needs to be met, he said.

“I used to be a treasurer, and I have never used more than 20 percent of the capacity of a treasury management system,” he stated. “Never in my life. But I used to pay for 100 percent of the features of the TMS.”

API technology can provide these treasury solutions on a case-by-case basis, Rahal continued, whether it’s to automate electronic payments or provide IBAN services. The sentiment echoes TreasuryXpress’ earlier move last year to launch its Lab, a marketplace of source through which treasurers can pick and choose which services they would like, instead of being forced to pay for all of these services under the umbrella of a single treasury management system.

Via APIs, Rahal explained, a treasury platform can act as the rail through which data from a company’s ERP systems moves to a bank. But as the use of APIs increases in the financial services space, so does the volume of the debate over data privacy.

According to Rahal, connecting banks to a third-party platform via API could be more secure than other methods of sharing corporate data with a financial service provider, as that third-party platform invests more into data security than a corporate itself does.

“Data hosted on TMS servers is much more protected than corporate servers, for several reasons,” he explained. “For one, it’s our job to invest much more than the company in security.”

Rahal added that, statistically, the vast majority of fraud comes from internal threats, not external sources, suggesting that data sharing via API wouldn’t necessarily make an impact on a company’s exposure to fraud. Indeed, research released last month from IDG Connect found that between 80 and 90 percent of IT executives that had been hit by some type of cyberbreach were hit because of unauthorizes system access by an internal staff member.

A treasury management system can be a vessel through which data is exchanged between an ERP system and a bank, enabling automated payments or other types of corporate financial services that treasury professionals need. But with any new FinTech, the influx of APIs looking to disrupt the corporate banking space leads to major questions, including how to protect corporate data and whether regulation may be in the pipeline to safeguard company information. Regardless, Rahal said he is confident in APIs’ potential to deliver to treasurers what they need (and nix what they don’t), and added that TreasuryXpress will continue to invest in API technology in the future.

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