Over the past few years, FinTech providers have been developing innovative cloud-based solutions that can help solve many of the ongoing challenges experienced by treasury professionals. Application programming interfaces (APIs) are the leading wave of this transformation. An API is a set of routines, protocols, and tools that specifies how software components should interact. APIs enable different software applications to communicate with each other, providing connections that would once have required significant work and implementation time. 

FinTech APIs are designed to address common treasury pain points such as slow software implementation times, challenging integrations, and repetitive manual tasks. So why has it taken so long for APIs to come treasury?  Perhaps there are still many unknowns to both practitioners and TMS providers but what you don’t know could actually be preventing you from taking full advantage of the cost-savings inherent in cloud technology. 

APIs Address Many Treasury Automation Obstacles

At TreasuryXpress, one of the biggest challenges that our clients are trying to solve is the amount of time spent on administrative tasks. Due to the complexity of the data and disparate systems, there are points where manual processes are involved. The more manual work that is required, the greater the chance of human error. But it often can be difficult to automate these processes using legacy tools, requiring extensive development and IT integration work. 

Common obstacles include:

• Lack of funds: Minimal (or nonexistent) budget for any software not perceived as business-critical
• Lack of time: Treasurers are so busy getting their jobs done – in large part due to all the manual processes – that they do not have time to plan for automation
• Lack of resources: Low in-house IT bandwidth or expertise for integration
• System downtime: Even with budget and resources, implementations have traditionally been painful and drawn-out processes, requiring long installation times and extensive training
• Vendor lock-in: Existing enterprise technologies are often expensive to upgrade and many are not designed to integrate with third-party applications

Leveraging an API, such as one that translates an enterprise resource planning (ERP) software payment file into a bank-ready format, is a fast and affordable way to reduce repetitive administrative tasks, save time, and reduce risk. It’s also cost-effective and relatively quick and painless to implement: a true frictionless technology experience.  

APIs in Treasury:  A Tale of Two Use Cases

There are two main uses for APIs in corporate treasury: 

• TMS providers are using APIs as building blocks for innovation. FinTechs can build new products more rapidly and affordably using these repeatable connections, and can pass those cost savings through to customers. Large financial institutions have made their APIs available to third-party developers, as part of a movement towards “open banking.” These APIs can be used to build secure applications and services, providing more options and a higher level of financial transparency for treasurers.
• Treasury professionals now have a world of possibility in front of them. Fast, affordable automation is just one of the many benefits that APIs can deliver. These integrations can help with market expansion as well as streamlining processes, by extending treasury’s access to remote subsidiaries and making it easier for global departments to interact and connect centrally. Whether using an ERP, a TMS, or both, it’s now much easier to connect with more data providers, more banks, and more third party software that will scale with the business. 

APIs:  A True Enabler for Transformation

Recently, TreasuryXpress released a payments API that automatically validates and converts ERP payment files into bank-ready ISO20022 Customer Initiation message payments. The interesting thing about this API, is not only that it offers tremendous convenience by simplifying an age-old problem but that it is a capability that takes minutes to implement and it can be used by anyone – a treasury team, an ERP, a TMS provider.  This API and all APIs truly open the gates of possibility and provide both economic and resource-driven benefits: 

• Cost savings: Using APIs is more affordable than switching or customizing enterprise solutions
• Time savings: Automating manual processes increases business efficiency and productivity
• Reduced risk: Fewer manual processes means less risk of human error  
• Easier installation: APIs do not require the same level of IT time and expertise as traditional software integrations
• Fast implementation: It is far quicker to implement an APIs than traditional software, minimizing downtime and any associated impact to business 
• Scalability: APIs make it easier to use only the services that the business needs and are designed to support higher volume business loads as the business grows

TMS have typically been isolated from ERPs, even in the cloud. APIs are a way to bridge the gaps and allow previously siloed systems to communicate with each other. 

This really is treasury transformation

Treasury is complex. But that doesn’t mean that treasury technology has to be overwhelming. APIs provide a cost-effective, frictionless technology experience: they can be plugged into both TMS’ and ERPs where and as needed, delivering greater system flexibility, agility, and scalability, and removing barriers to automation. As more FinTechs, TMS providers, and treasurers embrace APIs, business efficiencies will increase and technology innovation could experience exponential growth. If that isn’t transformation, what is?