• Marcus Sehr, Head of Treasury Services Europe at BNY Mellon


• 17.05.2021 03:00 pm
Fintech

As financial institutions become increasingly digitised, new ways are being created to make data rapidly available, whenever and wherever needed. Marcus Sehr, Head of Treasury Services Europe, BNY Mellon, explores how banks are leveraging APIs to provide fast, efficient and convenient payment services.

In today’s fast-paced world, an effective and successful bank needs to deliver optimised payment capabilities, with accurate and efficient processes. Application programming interfaces (APIs) – a computing interface that enables efficient communication and integration between software components – are one such innovation helping banks become more agile, innovative and better able to support their client’s needs. 

While balance reporting and detailed transaction information have been available for many years through online banking portals and SWIFT messages, APIs are breaking the mould by allowing real-time visibility over balances and payments, as well as providing increased speed and superior analytics. 

Looking forward, API technologies have the potential to unlock the next wave of streamlined information sharing and enhanced payment solutions. And we have only just started to scratch the surface in this respect. While API adoption is already a growing trend, as the industry moves towards greater connectivity and harmonisation – such as with the global migration to ISO 20022 – further opportunities lie ahead.

Driving operational efficiencies 

A key driver of API development is the need to address client demands in areas such as immediacy, transparency and user experience. This is being achieved through specialised API solutions.

For instance, clients are increasingly looking to quickly execute and view transactions, as well as manage cash across multiple devices, via the cloud. By incorporating an open ecosystem with standard industry-accepted methods, APIs – such as BNY Mellon’s Unified Payments API – can streamline efficiencies by automating payment processes and enabling advanced, customised reporting and transaction services. Through such a solution, clients can securely access global payment capabilities through a single endpoint to initiate payments and track the status of transactions, from initiation to completion.

Financial institutions (FIs) are also leveraging APIs to safely and securely exchange financial data and services, both internally and externally. Banks’ API solutions can be integrated with an organisation’s own systems, enabling direct communication with its internal operations and delivering accurate and fast payment and cash management information, 24/7 – without the cost of building those applications from the ground up.

By providing such solutions, clients can enjoy standardised and predictable interfaces with real-time data sharing, which saves time and resources especially through the pre- and post-transaction processing. As a result, greater focus can be directed towards value-added services, such as relationship management, forecasting analysis and customised reporting.

A changing landscape

The evolving ecosystem has accelerated the need for digital solutions – a demand that has continued to grow throughout the COVID-19 pandemic. During this period, APIs have proven their value by helping banks to establish business continuity plans (BCPs) – providing them with the ability to rapidly implement effective and resilient alternate solutions for contingency scenarios. 

Prior to this, if a bank suffered a disruption or an outage to its network provider, they turned to the provider’s online bank portal to instruct payment orders. Yet, these often struggled to mobilise and activate payment orders within a short period of time. Now, by leveraging APIs, banks can smoothly transition to an alternative channel to process payments when circumstances demand. 

Facing forward

The long-term success of APIs hinges on the need for greater standardisation. Providing an API that can work for multiple parties across various jurisdictions that each have their own regulations is a significant challenge for FIs – and one that can sometimes impede the success of delivery. Having a global standard and model for API development will therefore be crucial in taking the innovation to the next level. The upcoming migration to ISO 20022, which will improve, standardise and streamline cross-border interoperability and the exchange of data for APIs, will prove a useful step on this journey.

As APIs continue to unlock greater connectivity and harmonisation for FIs, they move closer to not only achieving their strategic business goals, but also enabling their clients’ own digital transformation goals. Banks must continue to explore agile, innovative and integrated API solutions as they shape the future of the industry. 

The views expressed herein are those of the author only and may not reflect the views of BNY Mellon. This does not constitute Treasury Services advice, or any other business or legal advice, and it should not be relied upon as such.