APIs and Cash Management (Harnessing the Hammer, Part 2)
In my last blog post, we talked about the hammer and the nail; the hammer in this case being open APIs, and the nail being the market need to adapt to changes in customer behavior and expectations from our commercial market. We laid out why the US is in a different position when it comes to open APIs—it has to do entirely with the regulatory environment, which is allowing us to start with the largest revenue opportunity first. Finally, we challenged you, the reader, on how you can begin on your journey. And that is where we are going to pick things up. What steps can you take today, and what use cases can you explore as we start getting our hands dirty?
Access to data must be the first priority
The first obvious step in this journey is access to the data. This is not a new use case for APIs; it has been in the market for some time and is the basis for a few of the more notable fintechs, which have made the shift from screen-scraping to harnessing the potential of APIs. The easiest example to provide here is account aggregation services. However simple, access to data could play a crucial role for commercial clients that are looking to do more with their financial information. Marry that with future-dated information and you start to get into the world of working capital management, and some of the options that banks could be looking at for expanding their offerings.
The next step? Actionable functionality
The next step on this journey would be actionable functionality. Once you have access to the data in new ways, the logical question would be: “what can I do with the data and is this where we can start building our new value propositions?” Whether it is looking at future-based scenarios and initiating a simple transfer, or something more complex, the only way to do that today is by logging into your account and creating a new payment. As the world of open APIs unfurls the ability to extend that functionality, do we know where we are headed? This could change the way that banks extend services as a startup matures into a commercial client, or how we service the small business market entirely, creating simple services for complex corporate needs in a way that makes sense to small business proprietors.
The beauty of open APIs is the simple nature of the APIs themselves, and the ability to hide some of the complexity that a specific payment or action may require on the back end (we do this in our orchestration engine, or ACI’s Universal Payments open API secret sauce, if you will). This allows a financial institution to create net new experiences for its customer base, and it also opens the door (literally if the FI chooses) for the bank to deploy platform access to developers outside the FI’s walls to create new apps and new propositions that are vertical or experience-specific.
As this opportunity (or our ‘nail’ if we try to keep the analogy going) grows around us, the only real question is how big will the opportunity be? Only time will tell just how transformational this open API movement will be, but make no mistake, the revolution is underway. The opportunities are out there and beginning to show themselves. Are you ready to take aim?
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