Real-time cash visibility
API connectivity allows the cash position in a treasury management system (TMS) to consistently contain the latest available figures from all bank accounts, in real time. This is a marked improvement from today’s rather common set up in which intraday transactions (MT942/camt.052) are added to yesterdays’ balance (MT940/camt.053) by the TMS, resulting in balances not adding up and consequent reconciliation challenges. In practice, this means that the onerous exercise of logging on and checking several bank accounts across different currencies is removed.
A consequence of this development could mean less support for standard bank access over time. Currently and historically, banks have heavily invested in user interfaces and web-based portals. When clients move away from access via the web to APIs, there will be less prioritization towards user interfaces and log-on devices.
Payments in and out
The transformation of payment processing towards an API-based, real-time payment infrastructure could translate into an interesting development in the support of more detailed account information. In parallel with other Open Banking players, SWIFT is also evolving by offering instant real-time payments, which will mark quite a transformation for the most widely-used standard solution. With the deployment of ISO 20022 from March 2023, the speed and quality of payments will ramp up.
Development will therefore continue in this area, and with that, increased expectations for the processing and monitoring of payments. Treasurers choosing to remain outside the new world of instant payments could be negatively impacted by substantial costs relating to middlemen and other transaction costs. This will affect the whole payment flow, including invoicing and pay-outs, as well as bank payments.