“The twin concepts of Open Banking and treasury APIs [application programming interfaces] can often provoke both confusion and genuine excitement,” said Abbas Rana, head of payments products at HSBC UK, at the recent ACT Annual Conference in Liverpool. Rana was speaking as part of a conference panel that attempted to bring delegates up to date with the progress towards what was promised as a game changer when it launched in 2018.
The timing was apropos, with 2022 already seeing growth in the spread of both Open Banking APIs and their application within treasury operations.
Indeed, according to Francis McGee, consumer representative at the Open Banking Implementation Entity (OBIE), 2022 will be a transitional year. “The implementation phase will end, and we need new structures that make sure Open Banking continues to be done well for consumers and run well for the ecosystem.”
The founding concept behind Open Banking is that the data that banks and other institutions hold on their clients belongs to the clients. “What follows from this is the ability for the customer to use that data in whatever way they want,” explained Laura McSkeane, product manager at HSBC.
She pointed out that treasurers are at the front line of the Open Banking revolution – but some may not be aware of the full extent of how Open Banking protocols are influencing their work. Whether it’s through using a credit agency to gather ratings on customers – a process speeded up by Open Banking – or offering ‘Buy Now, Pay Later’ to customers via partners who use APIs, a growing range of operations are being facilitated by Open Banking.
The same principles that have powered the development and proliferation of Open Banking APIs are increasingly leading the way in how treasury APIs are serving corporates.
Take payment initiation. “Instead of having to key in a payment that’s already been authorised within the content management system to the online banking portal, you can now initiate that directly from the treasury management system, either in bulk or single payment, once they’ve been through authorisation,” McSkeane said.
The session also heard from a senior treasury team member at automotive giant BCA, a company that has embraced Open Banking and embedded a range of functionalities into the everyday running of its business. The high value of the goods that BCA sells means tracking and billing is a progressively more challenging aspect of the company’s operations.
“As a business we now transact 100% of deals online with no physical auctions,” explained Chris Graham, BCA’s group head of tax and treasury. “We also run the business almost entirely digitally and we’ve had to adapt our payments processes to reflect that, so we need to know how customers’ payment journeys are affected.”
Graham explained that BCA was adopting bespoke APIs to stay ahead. “We’re being more proactive now – we’re using the granularity of the data we get through using Open Banking to provide colleagues with useful detail with which they can sell more effectively.”
“We’re just at the beginning of this journey,” said Rana, who pointed out that greater development will require collaboration across banks, fintechs, corporates and regulators to create more plug-and-play APIs for wider use.
“As the adoption of Open Banking APIs increases, platforms will need to respond to these new ways of initiating payments and to make it easier for users,” he said, pointing out that across the banking sector, new use cases are being developed as more fintechs explore ways of using Open Banking technology to streamline traditional banking processes.
He points to the emergence of Open Finance, a nascent concept which many hope will widen the scope of Open Banking to encompass a greater range of financial service products. “It should also go beyond simple financial data to include KYC, tax, pensions and insurance. IT aims to make onboarding more seamless and to help customers and businesses to optimise their finances. Watch this space.”
Christian Doherty is a freelance business journalist and regular contributor to The Treasurer
This discussion took place at the ACT Annual Conference held in May in Liverpool. The 2023 ACT Annual Conference will be held on 16-17 May 2023 in Newport, Wales, UK and you can register your interest to attend here: https://www.treasurers.org/events/conferences/annual-conference-23
