"The shift is around the open culture," he said. "I'm going to expose a bridgehead, and you can connect to it however you want. It doesn't have to be one-to-one; there can be a multitude of different ways of interacting."

Ranta gave the example of initiating a wire transfer payment. Currently, a treasury staffer would log in to the treasury workstation or go to the bank's treasury portal and log in, then go through the steps the bank has laid out for sending a wire.

When APIs are deployed, the bank's process for sending a wire may be altered, Ranta said. "The bank says, 'Here's what I need,' and the fintech or corporate can rearrange those [requirements] on screens, or do it as a voice protocol."

Enrico Camerinelli, a senior analyst at Aite Group, said APIs will increase the information treasury teams have at their disposal and the ease with which they can access it.

He cited a company that realizes as it is doing its cash forecasting that it's short of funds and needs to move money from one bank to another, as well as changing the funds from one currency to another.

Currently, the treasury team might have to employ three different systems or modules in that process: its cash forecasting system, a payments module, and a foreign exchange system. But with APIs that give the company access to the back office of its bank, the treasury function might be able to execute work involved more quickly and without having to use so many different systems, Camerinelli said.

Real-time data accessed via APIs can also provide a boost to treasury dashboards. Currently dashboards may be updated on a daily basis or in batch mode, Camerinelli said. "If you can immediately or automatically absorb and consume the data coming from the bank's back-office system, you could do that in real time."

Citi's Payment-Related APIs

Citi announced in February that it was rolling out payment-related APIs for its connectivity platform, CitiConnect. The CitiConnect APIs—one for payment initiation, one for checking account balances, and the third for checking transaction status—are available across 96 countries.

Treasury departments can use the APIs to make payments, check their account balances, or check on the status of a payment from their treasury workstations or ERP systems.

"The need to have real-time access to balances and information is pretty well-known," said Mayank Mishra, managing director for channel and enterprise services at Citi Treasury and Trade Solutions. "It's something that corporate clients have been asking for a few years."

Mishra, pictured at left, said there's also clearly a need for real-time integration, with the possible beneficiaries ranging from B2B and B2B2C payments to ecommerce, efforts to improve working capital management and just-in-time payments.

Citi already processes some $50 trillion worth of payments a year, and Mishra said the bank was careful to ensure that the taxonomy it used for CitiConnect API matched its taxonomy for the bulk processing of payments, including using the same format, the same encryption, and the same security protocols.

Mishra also cited the fact that CitiConnect API is "omni-channel–enabled," so that if a treasury uses a Citi API, say to initiate a payment, it can follow up that transaction using either CitiDirect BE, the bank's online portal, or the mobile or tablet versions of the portal.

He noted that APIs aren't a one-way street. While Citi is making its APIs available to all customers, some corporates have their own APIs and want the bank to adjust to them, Mishra said.

In some industries, such as e-commerce, "these players do not typically have just one single ERP or workstation," he said. "They construct their own APIs to talk to the different banks. Some clients will have their own APIs because of their own internal infrastructure.

"There is some flexibility to adjust if the client is publishing the API, versus the API being published by the bank," he added.

And when a company's IT team is working to build out the company's use of Citi's APIs, Citi provides a "sandbox" where "developers for our client community can come and test their application before they roll it out," Mishra said.

In its announcement, Citi said it plans to develop more APIs in additional areas of transaction banking, including "service inquiries, account management, and liquidity services."

'Deconstructing Traditional Channels'

Tom Durkin, managing director of digital channels at Bank of America Merrill Lynch, said APIs give banks "an opportunity to think about deconstructing traditional channels.

"Banks can make more information available to be consumed, instead of saying, 'Come into our system, tell us what you want, and we'll make that available for consumption by your system,'" Durkin said. "Clients may want to stay in their native system—their treasury workstation, ERP, or even Excel. We want to make that information available so it can be consumed by their native applications."

Durkin noted a couple of ways that BofA ML is already using APIs in its treasury systems.

The bank's CashPro Accelerate reporting solution can aggregate bank data and funnel it into a company's Excel spreadsheets. "The corporate can work within that to manage its cash position without having to manually input data," he said. And when the bank's mobile banking program, CashPro Mobile, provides alerts to customers using an iPhone, an API does the work of communicating between Apple and CashPro Mobile to get the notifications to the customers.

Durkin said he expects the bank to use more APIs in the future, and suggested that they could be employed to provide mobile notifications related to positive pay exceptions or wire payment approvals.

Hari Moorthy, head of banking technology for the Corporate & Investment Bank at J.P. Morgan, cited ways J.P. Morgan employs APIs to work with corporate customers.

For example, if a company needs to check on the status of a payment it has made, "we provide an API, and they can use that API from their workstation or ERP and get [the payment's] status," he said.

There's also an API clients can turn to if they need to look up a historical balance. "Instead of going to our webpage, they can just ask, give a date, and get a balance for that date," Moorthy said. Another API provides companies with disclosures.

"We currently have a lot of APIs," Moorthy said. "Our clients use them, they are happy with them, and they want more of them."

The bank is now building the next generation of its treasury platform, and it will involve more APIs, Moorthy said. He noted that the bank wants this platform to cater to clients' needs faster. "The new platform will provide more APIs on a client-by-client basis," he said, so that companies can use the bank's data within their existing workflows.

Portal for Developers

Another approach is for a bank to share its APIs with financial technology companies to allow the fintechs to build new applications on top of the bank's existing technology.

In February, Standard Chartered, which is headquartered in London, launched an API portal to encourage developers to come up with solutions that are integrated with the bank's existing solutions. The project's focus is initially transaction banking and cash management.

The Aite survey showed that 52% of the banks surveyed planned to provide a platform that gives developers a way to access the bank's APIs in the next two years.

Regulatory Factors

The EU's Payment Services Directive 2, which requires banks to open accounts to third parties beginning next year, is cited as a factor pushing European banks to adopt APIs.

But Aite's Camerinelli noted that the use of APIs also fits in with various countries' push for real-time or faster payments. "If you want to make a real-time payment, the best thing is that you can directly access a bank account," he said.

ACI's Ranta said that while banks in Europe are getting a push from regulators, in the United States "I think we're getting the nudge from the competition standpoint."

ACI is seeing the same amount of interest in APIs from banks in North America as it is from those in Europe, Ranta said, adding that some of the banks affected by European regulations are big global banks based in the U.S. "Those European regulatory actions are going to ripple into the U.S.," he said.

J.P. Morgan's Moorthy said that bank's development of APIs wasn't focused on a specific country.

"This sort of advancement will change the landscape for our clients eventually, and we'd rather be early adopters and leading the pack," he said.

Impact on Treasury Services

Camerinelli suggested that APIs could allow banks to serve midsize companies—those between $750 million and $1 billion in revenue—more directly. Such companies are currently underserved by banks, and while they can buy software to help them deal with cash management chores, banks could employ APIs to streamline those processes. Banks could "build thin layers between their back-office systems and corporate clients' ERP systems, just to enable this interaction," Camerinelli said.

Ranta argued that the use of APIs will result in big changes in the treasury services space over the next five to 10 years. "You're going to see workflows change, making it a lot easier," he said. "I hope the days of 30 tokens on a carabiner disappear."

Banks will be able to adopt their products to tailor them more to the needs of the company or industry vertical, he said.

Ranta also sees APIs allowing technology companies to take on some of the role that banks previously performed for corporates. "With APIs, I think you're going to see a disintermediation of some of that relationship," he said.

Moorthy argues that APIs are "a fundamental transformation."

When corporate customers had to exchange files with the bank, "it was not necessarily real-time," he said. "With APIs, it becomes more real-time for clients.

"They're not hopping around into multiple different systems, so it fundamentally changes how clients behave and how clients interact with us," Moorthy added. "It's a big transformative change that's about to happen in treasury services in the next several years."