BankingOpen BankingOpen Banking will “dramatically” change the way treasurers work

Open Banking will “dramatically” change the way treasurers work

Power of Open Banking outlined, although experts disagree about timescales involved in the technology becoming mainstream.

The technological shift brought by Open Banking will “dramatically change the way that treasurers will be operating in the future,” according to Anders Olofsson, Head of Payments at Finastra.

Discussing the impact of Open Banking on treasury in the short-, medium- and long-term, Olofsson went on to suggest that banks won’t be the only providers in the market – and that the rise of fintechs will accelerate. “I believe that there’s a misconception, predominantly advocated by banks, that banks will be providing the technology platforms in the future. I truly believe that the corporates themselves in their business model need to rely on collaboration,” he argued.

“Open Banking will be a standardized way for banks to have those platforms as distribution channels and/or for corporates to collaborate with others who may use their balance sheet. For instance, to provide financing of their accounts receivable or accounts payable.”

Olofsson feels that Open Banking is creating several different opportunities for corporates moving to different platforms. “A treasurer in the future may have more partners for their financing than just the banks. They may go to the operator of a platform, for example. Or, it might be as well that buyer financing is being done on the platform.”

The future is now?

As for the pace of change, Finastra’s Head of Payments was adamant that the transformation was happening quickly.

“I think that we’re seeing it right now. I see Alibaba and a few other platforms are providing supplier financing already as part of a platform, disrupting the banks in the process.”

Long-term, he was looking at most 10 years ahead by which the power of Open Banking will be fully realized.

“I think it will still take some five to 10 years until we are there, but the really large corporates are interacting via ‘new’ platforms already. Also, thanks to Open Banking we can have a group of standards, where banks will enter into a variety of API standards to be serving these corporates or these platforms.

“In the mid-term, I think that ERP vendors will have the actual opportunity to both disrupt the banks and play a critical role in assisting the corporates in this mid-term strategy,” he added.

Or tomorrow?

However, Hakan Eroglu Global Open Banking Expert Lead at Accenture offered a differing view of the current state of progress in Open Banking-led digital transformation to Oloffson – suggesting that while work is in progress, corporate treasury is yet to see mainstream open banking benefits.

“When we look at Open Banking currently, the different use cases and the possibilities that are available today, we mostly talk about retail use cases, where regulatory driven APIs have basic functions on account information and initiating a payment.

“This is not sufficient for the treasury space at the moment. But, we see that the demands of such solutions for the SME space and also the corporate space is given where the functionality of asking for real time information on the accounts balances or account transactions is becoming more and more important. This is something that we see in the retail space but is not given in that level in the corporate space.”

Power of Corporate APIs

Eroglu did concede that the large corporate banks are already beginning to develop their own APIs.

“They are building specific, dedicated, high performance corporate APIs, where you can control and manage all the different – or most – of the current payment- and account-related functions directly from the ERP system,” he said.

Eroglu said that soon there could be a standard for corporate APIs and ERP software where you could aggregate all the information directly from the front and ERP solution.

“That’s nothing new because you can have it with Swift and with other standards as well. But, the corporate APIs are much more powerful, they are in real time and you can do things in a much more granular way than you can do with Swift or with other standards.

“It’s much more powerful and you have the opportunity, if ERPs are provided, to build that platform around it, where you have an API group and third-party provider integration into your ERP software to provide additional services. For the long term, where you have a third party platform that brings ERP, brings TPPs, and brings banks together to co-create new services.”

Treasurers not taking advantage?

Eroglu added that one of the biggest problems within treasury today was a lack of understanding which inhibited the sector’s ability to take advantage of new technology.

“There’s lots of things going on but I think most of the people in treasury, in the corporate space, when you ask them about open APIs, open banking, they are not really aware of what is the real benefit,” he said.

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