Denne siden findes ikke på norsk
Bli værende på denne siden | Fortsett til en lignende side på norsk
As the pace of technical development continues, the potential benefits to a Treasurer’s daily work are also expanding. For example, the ability to instantly access large amounts of data leads to quicker and more agile decision-making. Open Banking is part of this technical evolution, and we are likely to see many positive changes from the increased use of Open Banking in Treasury.
A major selling point of Open Banking is that it enables the Treasurer to access instant bank account data from multiple banks through the use of an API. Open Banking is all about APIs and the transition from batch processing of data to real-time integrations. The use of APIs is growing in several fields, and this fact, together with Open Banking becoming more common, will normalize real-time data across many more systems.
Open Banking comes with some obvious and invaluable benefits regarding cash visibility, real-time payments, data insights and more. Considering this, the decision to move to Open Banking should not only be based on the potential benefits to a Treasurer, but should be made with an eye to the consequences of having to manage without.
The decision to move to Open Banking should not only be based on the potential benefits to a Treasurer, but should be made with an eye to the consequences of having to manage without.
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.
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.
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.
It is the data which has the ability to link together various processes within an organisation. For example, connectivity between TMS and enterprise resource planning (ERP) systems for cash management is moving towards API. The same goes for other business-critical interfaces. Perhaps the greatest value, aside from saving the man-hours of labour-intensive processes, is how accurate real-time data informs better decision-making, including more accurate analysis and forecasts, and mitigation of financial risks.
When other interfaces are real time, the exclusion of bank balances is analogous to putting together a puzzle without the critical pieces. When a time lag of information occurs, there is a very real risk to properly understanding and acting on cash flows and exposures. The use of artificial intelligence (AI) is well placed here, for example, to automate cash flow forecasting.
Perhaps the greatest value, aside from saving the man-hours of labour-intensive processes, is how accurate real-time data informs better decision-making, including more accurate analysis and forecasts, and mitigation of financial risks.
The technology described above is available today, yet for most treasuries it still lies in the distant future. Even though the B2C market has experienced the predicted boom relating to services and functionalities across a number of different businesses following the PSD2 Directive, the business case for banks to service treasuries has not been sufficient to kick off the same development in the B2B Open Banking market. Instead, the developments have been driven by case-by-case requests from treasuries with outstanding challenges:
Treasuries hoping to adapt to the Open Banking technology have time to catch up. The range of premium APIs is constantly growing, making it easier to find actual business cases. In the meantime, all data not yet made available through APIs can be covered by existing set-ups. While some treasurers may be tempted to wait for their TMS vendors and banks to sort out the challenges, it is actually possible to begin the journey now and start reaping the benefits of Instant Treasury.
John Fahlvik is Team Manager for SkySparc’s fast-growing global FIS Practice. He is an experienced treasury and asset management specialist. Previously Product Owner at Volvo Cars, John was instrumental in setting up the company’s treasury digital innovation strategy. He currently works on strategic initiatives, including treasury digitalization and data analysis projects at a number of blue-chip companies.
SkySparc is a business consultancy with a focus on driving value for corporates and financial institutions. For over 20 years we have been helping our customers achieve efficiencies through progressive software, domain expertise and technological excellence. It is through our tried-and-tested methodology, client commitment and independence that SkySparc continues to bring innovations to support its clients.
The views and opinions expressed in this text belong to the author and do not necessarily reflect the views of Nordea.