Application programming interfaces (APIs) are not just pieces of code that allow two applications to talk to each other, they facilitate new ways of doing business. Now with regulations such as PSD2 opening up the payments market to further innovation, treasurers have the opportunity to move from a world of batch processing towards a more real-time environment. Eleanor Hill of TMI sets out this practical guide to what treasurers really need to know about APIs to reap the benefits of transaction speed and transparency
Anyone with a smartphone or a LinkedIn profile will have used APIs in one form or other, but it has taken the Second Payment Services Directive (PSD2) in Europe for businesses to see how a broader ecosystem of payments partners – including banks – can deliver increased value.
In this explanatory article, Eleanor Hill talks to a number of industry experts – ranging from Vanessa Manning, Head of Liquidity and Investment Solutions, Global Transaction Banking, Deutsche Bank, Dick Oskam, Global Head of Transaction Services Sales, ING Wholesale Banking, Tom Durkin, Head of Global Digital Channels in Global Transaction Services at Bank of America Merrill Lynch, as well as treasury management software provider Anis Rahal, CEO of TreasuryXpress - about how APIs are transforming the banking and treasury landscapes.
Manning observes that PSD2 is far from the only regulatory development driving APIs forward, although “it is true that PSD2 has already enabled a new generation of fintechs, payment service providers (PSPs) and account information service providers (AISPs) to develop solutions which both compete with and complement formerly bank-proprietary solutions”. In her view, the agreement of API technical standards across the EEA over the coming years, alongside national regulatory harmonisation across APAC and Africa around API and QR code adoption “will further increase the flexibility of connectivity, data richness and bespoke dashboarding and analytics available for corporate treasury and their commercial sales teams.”
As for the concerns about security, banks and vendors are taking their own measures to ensure the robustness of API offerings. Rahal notes that APIs add an “additional level of protection” because the API transfers small packets of relevant information called up for that particular communication, and the user’s data is “never fully exposed to the servers”.
Head of Liquidity and Investment Solutions, Global Transaction Banking | Deutsche Bank
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