Treasury and Payments
How APIs are delivering real-time data for corporate treasurers
Treasurers are using APIs to move from traditional manual processes to the treasury of tomorrow. Here we explore some of the pillars behind this digital transformation strategy: automated treasury operations, real-time visibility, real-time payments and multi-bank data.
The potential for APIs to automate treasury tasks is substantial and on the rise.
And in the current environment, automation and digital transformation are more necessary than ever as corporates strive for real-time monitoring of cash flows, optimization of working capital and the flexibility to respond to rapid changes in the macro landscape.
Of course, the cost of these rewards is the investment in tech integration. This has been a perennial challenge, particularly when working through legacy systems.
One potential solution is to think of technology and treasury as one unit. Consider the following real-life examples of how treasurers have unlocked that synergy to drive growth.
Achieve real-time reconciliation with treasury APIs
Traditionally, treasury operations have relied on an end-of-day reconciliation process using SWIFT MT940. Treasurers are now looking to use APIs to provide real-time data to guide and enhance more immediate decision-making on liquidity and investments.
API case study: A global leasing firm had a fast-moving, account-intensive business model and wanted to move to real-time provision of account data into their TMS, rather than the traditional D+1 via MT940.
The firm worked with J.P. Morgan and their treasury management system (TMS) provider to implement an API gateway that delivered real-time balance reporting, followed closely by real-time transaction reporting. This integration delivered many benefits for the firm, including:
- Instant visibility of the company’s cash position ensures that idle balances across J.P. Morgan accounts are minimized.
- Real-time balance and transaction reporting help treasury to track the movement of cash effectively.
- Reconciling transactions across accounts daily helps to minimize the risk of fraud.
- Real-time reporting has enabled the treasury team to come closer to its goal of closing month-end on the first day of the month.
Pat Murphy, Senior Manager, Treasury, Avolon
Get started in a matter of days with plug-and-play APIs
APIs can help reduce manual error and increase operational efficiency throughout the end-to-end payment chain. This in turn can deliver data for the treasury department to build a simple portal where they can get visibility into all their transactions, whatever stage they are in, without having to contact their bank. That’s the intelligent part of intelligent automation.
API case study: J.P. Morgan worked with a manufacturing firm who had an ambition to obtain real-time treasury data. With factories and business across the world, it was vital that Autoneum obtained a comprehensive and accurate view of their global liquidity. Following initial discovery discussions, the firm installed our spreadsheet plug-in as its channel to access account data. The entire solution was installed, tested and implemented within nine days. The treasury team can now access real-time information, improving its reconciliation and forecasting processes and redressing the previous lack of visibility over their accounts, resulting in several benefits:
- Ability to retrieve real-time data from its accounts across the world at the click of a button and consequently reconcile transactions in real-time.
- All data is imported directly into the existing spreadsheet software, which contributes to easier reconciliation, forecasting, and integration with existing processes. Additionally, all data is materialized in pre-configured templates, further enhancing the ease of use and facilitating the data’s integration into existing processes.
- APIs facilitate a real-time view of activity on accounts and users’ entitlements, helping to prevent fraudulent access and activities.
Janko Hahn, Head of Treasury Operations, Autoneum
Take advantage of new real-time payments rails
Similarly, in the payments space, treasurers have been adopting APIs to take advantage of new real-time payment rails in Europe and the U.S. APIs are currently the only channel to support global real-time payment. Perhaps the most significant example is SEPA Instant – the first cross-border faster payments scheme. SEPA Instant regulations stipulate that payments must move from point A to point B within 10 seconds, so API integration is a must.
API case study: A consumer technology firm wanted to move to real-time cash-out for suppliers and vendors. In particular, the lack of instant cash-out for their delivery vendors was leading to retention and onboarding challenges at a time of increased demand for deliveries during the pandemic.
J.P. Morgan delivered a fully API-driven end-to-end payment solution that allowed the firm to validate accounts, manage real-time driver payment initiations and report on transactions. The extra security can reduce transaction costs through improved approval rates and can also reduce administrative automated clearing house (ACH) returns or unauthorized transactions. The firm has reported that over 60% of their vendors have taken up the new instant cash-out feature.
Connect to multi-bank data with APIs and Open Banking
In some traditional multi-bank reporting systems, balances are estimated by the reporting bank using SWIFT messages received from the account-holding banks. By determining balances this way, it is necessary to manage the risk associated with data changes, differing message formats, and delays for accounts with high transaction volume. Additionally, it is costly to maintain the reporting infrastructure and regularly transmit SWIFT messages, especially for firms that have a large number of accounts.
API case study: To overcome these challenges and provide on-demand and real-time multi-bank reporting, one of the world’s largest travel aggregators worked with J.P. Morgan (the reporting bank) and their account-holding bank. This represented a demonstration of the value of Open Banking using APIs, underpinned by the European Union’s Second Payment Services Directive (PSD2).
With the travel firm’s consent, J.P. Morgan established connectivity to the account-holding bank’s APIs and can now, at the click of a button, retrieve the firm’s real-time balances without having to process thousands of SWIFT transactions, as is necessary for traditional multi-bank reporting.
Start small and keep it simple
Connecting through APIs can initially seem overwhelming, but it can be much simpler than it looks, particularly as adoption grows throughout the financial services ecosystem.
We believe that it is sensible to start exploring the possibilities now. Even if you are not ready to execute a project, consider discussing your needs and requirements with your bank, as this may be beneficial further down the line.
J.P. Morgan Developer: Your Gateway To Our APIs
J.P. Morgan’s plug-and-play apps, powered by API technology, have helped make real-time treasury a reality for corporate and institutional clients.
- Our innovative solution requires minimal IT development by the client and is easily configurable. By embedding the applications into clients’ enterprise resource planning (ERP) systems, their users are now able to access bank information such as account balances and transactions, cross-border payment details and statuses, and user statuses directly on their ERP system in real time.
- Clients can also track their cross-border payments via the SWIFT gpi payment rails and view payment details and statuses - again, directly from their ERP in real time.
- Due to clients having limited IT resources, J.P. Morgan wanted to provide a quick and seamless way to help clients digitally transform their treasury and finance functions. The API solution accelerates the implementation timeline, converting what might otherwise be a complex and time-consuming IT project into a light-touch implementation project – a crucial differentiator during a time of limited resources.
- In the current market landscape, clients are still adopting manual, paper-based and batch-based processing systems for their businesses. It is increasingly clear that businesses must embrace technology to guarantee success in our digital world.
J.P. Morgan is developing client-centric API solutions that can increase productivity and potentially cut costs. These experiences can offer a simple and quick alternative for clients to help kick-start their digital transformation with API technology.
To learn more, please contact your J.P. Morgan representative.
How Financial Institutions Can Unlock Value From APIs
Learn how financial institutions are able to benefit from the rapid expansion in Application Programming Interfaces (APIs) to support intra-day liquidity management, track and trace payments in real-time and streamline cross-border currency transactions.
Create Seamless Payment Experiences with APIs
Merchants should be asking their payments providers, "When it comes to APIs, are you future-proofing me?" And crucially – "Am I going to have to do additional work a year from now to integrate a new set of technologies?"
Here’s how we’re making our API offering as smooth, secure and future-proof as possible.
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