Programming interfaces enable corporations to connect their payment systems directly to their banks
This year, we have honorees across a range of product areas that all aim to either help make their clients’ lives easier or make it easier for the banks themselves to foster innovation. From cash management to payments to FX, this year’s innovators cross the gamut of transaction services.
Application programming interfaces (APIs) are a big buzzword in transaction services this year—driven in part by the push for open banking standards and changes under the EU’s Payment Services Directive 2—and a number of our nominations were for API-based solutions. An API is a set of routines, protocols and tools for building software applications that specifies how software components should interact. Basically, it is a plug-and-play interface between systems.
In Europe, banks will need to satisfy requirements under the PSD2 that they open their data to third-party providers, and APIs can enable that process. This is the push, but the reward is to develop solutions that are more reactive and can come faster to market, with easier access and greater transparency for clients.
Citi | CitiConnect API
The CitiConnect API allows a company’s treasury workstation or enterprise resource planning (ERP) system to be integrated directly with its bank’s platforms and solutions via API. It makes it easier for companies to “develop interfaces with Citi to initiate payments, collect payment statuses and check account balances,” the bank says. The API technology is also integrated across Citi’s 96-country footprint. According to the bank, it is one of the first transaction banks to enable its full, global footprint through API for cash management.
“Establishing integration between corporate clients and their banks can be a costly, complex and time-consuming affair. In many cases additional providers, including service bureaus and file-transfer platforms, need to be leveraged by the client,” Citi says. As a result, both corporate clients and banks are continuously looking to simplify the integration process to exchange payment instructions.
The bank had used an API for integration on the consumer side, and Citi’s Treasury and Trade Solutions (TTS) business leveraged that infrastructure, technology and experience to accelerate development processes for TTS. Development of the CitiConnect API took nine months, and it came about as a result of input from customers seeking a direct-integration solution using API.
Danske Bank | DynamicPay
DynamicPay takes a much-used solution—reverse factoring—and puts it in the hands of smaller suppliers, with rapid onboarding and allowing them to drive
the decision-making about how, when and with whom to engage in dynamic discounting. The reverse-factoring process involves a bank’s committing to pay a company’s invoices to suppliers at an accelerated rate in exchange for a discount.
Conventional programs usually capture only a buyer’s top tier of suppliers, leaving out smaller suppliers as a result of the onerous onboarding, documentation and regulatory reporting processes. DynamicPay, however, “provides an alternative solution that has similar characteristics but enables simple and speedy onboarding of the entire supply chain, while enabling all suppliers access to early payment of an invoice against a dynamic discount,” the bank says.
It is innovative in that it is bank-independent (the supplier does not need to be a customer of Danske Bank), and it automates the cash discount process: The system uses the existing payment file and, based on the buyer’s bank payment instruction file, calculates a dynamic discount on behalf of the buyer. It then ensures the required funding is available and presents the early payment offer to the supplier.
DynamicPay does not require a long KYC (know your customer) process. “Onboarding is done online and in one process without the involvement of the buyer,” notes Danske. Finally, it is a global solution: Suppliers can originate anywhere in the world.
DenizBank | Competitive Idea Playground
Product & Process Innovation
The Competitive Idea Playground is a gamification-supported app to encourage employee innovation, with “Solution Tournaments” to build consensus around new innovations. What this means is that DenizBank has set up a tournament structure internally, where employees compete to create the most innovative new ideas and solutions, and the employees themselves vote on which solution is the most innovative. In addition, the whole process is run through a platform that also acts as a social environment for idea sharing.
It provides a gamification platform where each user gains points (for rewards) upon entering a solution, making a comment on or liking the other solutions, joining a tournament or voting on a tournament.
IGTB | Ripple-Backed Payments Solution
iGTB’s blockchain-based payments solutions provide faster, more secure payments between partner banks. The Ripple-backed solution is a unique addition to the Payment Services Hub of parent company Intellect Design Arena. iGTB has completed proof-of-concept testing with a client-bank, using a single currency for the testing phase. Banks using its hub can take advantage of Payments Solution to eliminate delay in confirming receipts for payment processing, integrate messaging and settlement processes, reduce error rates in pretransaction communication and lower settlement risk with real-time payment tracking. This iGTB payments solution provides transaction visibility for exception handling and reduces processing costs versus traditional correspondent banking arrangements. Because it is connected to the Ripple network, it also lets users take advantage of real-time FX quotes from network market participants.
ING | Virtual Cash Management
Virtual Cash Management (VCM) from ING takes two solutions, virtual bank accounts and Virtual Ledger Accounts, and combines them into the integrated
VCM solution that allows companies to keep the benefits of local accounts—including local international bank account numbers (IBANs)—while having centralized oversight of funds and reducing administrative costs. It does not require highly sophisticated technology solutions to be in place within treasury, so it can benefit a wide range of companies and opens up the possibility of using tools that generally have a high barrier to entry in terms of technology and budget—such as on-behalf-of structures. Says the bank, “Through the enhanced reporting capabilities of VCM, and its invoice-matching engine, treasurers can also concentrate on optimizing the company’s working capital position by streamlining order-to-cash and purchase-to-pay processes.”
Although each virtual bank account has a virtual bank account number that conforms to the local IBAN, it is unfunded. Transactions are initiated or received in the master account. A Virtual Ledger Account is a “multibank reporting dashboard” that acts as a fully functioning alternative to treasury management and ERP systems. It is basically an administrative subaccount for treasury to allocate cash without segregating it physically.
Invapay | Card-Based API Payments Solution
Invapay’s card-based solution takes advantage of the delayed-payment facility in payment-card schemes to let buyers extend their days payable outstanding while paying their suppliers within a few days, and it opens up the use of supplier card payments where previously they were not feasible. The solution integrates with a buyer’s existing ERP systems through a simple payment API to deliver a secure, data-rich automated payment solution, with suppliers paid via electronic funds transfer.
It has also integrated World First’s foreign exchange API to provide users with real-time FX visibility across multiple currencies, and with the cash and treasury optimization features of its existing platform—and enhanced transaction data— this ultimately offers greater control and a highly flexible payments solution. It supports p-cards, debit cards, business cards, supply chain finance, trade finance and working capital accounts. It is Cloud based and can be set live in just 24 hours.
Mashreq | Cardless Cash Withdrawal Using Internet Banking
Mashreq’s cardless cash withdrawal solution enables corporate customers or their beneficiaries to withdraw cash from Mashreq Bank ATMs without the use of
a card, via the Online Banking portal. With this solution, a withdrawal transaction is initiated via the portal and, once approved, a code is sent to the beneficiary’s mobile. That code is entered at any Mashreq Bank ATM—in any of the countries in which it operates—and cash is dispensed. This is a unique solution for corporations, allowing a central corporate treasury team to seamlessly support the immediate cash requirements of international branch offices.
Nordea | AutoFX
AutoFX integrates best-of-breed hedging strategies with advanced data insights to accurately forecast exposures and automate the transfer of currency balances and related FX conversions. It enables customers to enter instructions on how foreign currency exposures should be handled, and the system automatically monitors accounts and executes orders. As a result, the bank says, “accounts can be swept to reduce excess balances or, alternatively, topped up to eliminate negative balances,” all on an automated basis. It helps facilitate automated hedging and interest optimization strategies.
“It also helps in automating cash flow and liquidity management; so if a customer has flows in multiple currencies, Liquidity Management automates the execution of overnight FX swaps.” This can eliminate negative balances in foreign currency accounts and minimize overdraft interest payments. The system is integrated to a client’s enterprise systems via Nordea’s REST API. After an 18-month pilot phase, AutoFX was launched in February.