B2B Payments

From Heavyweights To Newcomers, Finserv Goes All-In On APIs

The conversation around B2B payments innovation and progress cannot be held without the banks. Sure, FinTechs are flocking to the industry to play their part in disruption, but traditional FIs have to be involved in addressing and solving the many, many points of friction that plague corporate payments today, from late invoice payments to clunky cross-border transactions.

Unfortunately, said Kevin Fox, executive vice president of NovoPayment, he’s found “a disconnect between the reality that these banks are living in and [the needs of] their customers, particularly their corporate customers.”

Fox spoke with PYMNTS for its latest B2B API Tracker, powered by FI.SPAN. While the challenge for traditional FIs to meet the nuanced needs of corporate payers is practically universal, this trend is particularly acute in Latin America, where, the executive explained, “many financial institutions … have trouble innovating and advancing their digital agendas.”

“Many of them have [a] siloed infrastructure, legacy systems [or] their products are disparate,” he said. “Combine all that and, as a result, they have a lot of inflexibility in offering digital solutions to the market.”

That makes Latin America a prime target for payments innovation, particularly when it comes to APIs. The data-sharing technology has made inroads across Europe thanks to PSD2, and in the U.S. thanks to competitive market pressures. In Latin America, Fox said, APIs have the potential to make their mark in more ways than one.

NovoPayment, for instance, recently announced a partnership with Visa to facilitate real-time payments for the logistics industry in Colombia. The company is also working in Latin America to deploy APIs for airlines’ B2B payments needs, enabling pilots to obtain a temporary bank account to make payments while on the job.

Different Markets, Different Challenges

The use of APIs to enhance B2B payments can be seen across jurisdictions: While Visa is working with NovoPayment in Latin America, the payments giant is also testing its B2B Connect solution with Union Bank in the Philippines to enhance cross-border corporate transactions. In Asia, South Korea’s Shinhan Financial Group, another Visa B2B Connect partner, is also looking at a blockchain-based tool to enable integrated authentication for financial services clients via API.

According to Modulr Finance CEO Myles Stephenson, APIs can also be instrumental in addressing global challenges of client on-boarding for financial services companies, FinTech and traditional. For instance, the U.K.’s API-driven Faster Payments scheme, he noted, enables faster on-boarding, while PSD2 in Europe is likely to follow suit as more banks and FinTechs collaborate thanks to data sharing enabled by APIs.

Bank of America is another financial institution to have announced its recent work with API technology, revealing a suite of APIs in adherence to PSD2 rules. According to the head of global transaction services for Bank of America Merrill Lynch, Faiz Ahmad, “Clearing systems, regulatory mandates and banking channels are evolving to support real-time interactions with unbundled banking services. Our clients will expect to integrate these directly into their business processes and applications.”

NACHA’s API Standardization Industry Group also recently announced a partnership with Accenture to enhance the financial services industry’s access to API resources as the data sharing trend continues to proliferate.

“To foster adoption, drive innovation and simplify integration of the APIs we’ve identified, we felt it was critical to offer the payments ecosystem tools to educate, develop, test and provide feedback,” said NACHA managing director George Throckmorton in a statement.

Industry heavyweights like Visa, NACHA and Bank of America are now operating in the same playing field as newer FinTechs, like NovoPayment and Modulr Finance, as the industry jumps onto the potential of APIs. In B2B payments, from Latin America to Asia and beyond, that means addressing an array of challenges, like traditional banks’ struggle to innovate or corporates’ lack of visibility in cross-border payments.

Check out a full breakdown of the latest news in B2B API trackers in PYMNTS’ latest report.


New PYMNTS Study: Subscription Commerce Conversion Index – July 2020 

Staying home 24/7 has consumers turning to subscription services for both entertainment and their day-to-day needs. While that’s a great opportunity for providers, it also presents a challenge — 27.4 million consumers are looking to cancel their subscriptions because of friction and cost concerns. In the latest Subscription Commerce Conversion Index, PYMNTS reveals the five key features that can help companies keep subscribers loyal despite today’s challenging economic times.