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Azzana’s Herreman: "Will corporates use API connectivity?"
In the FX space, as in all others, multichannel connectivity is key – and API is quickly becoming a prominent channel that can no longer be side-lined

January 16, 2019 | Kjeld Herreman

Open banking and the API economy are the talk of the town – what it all means for banks, third party payment providers, and account information service providers – but one element seldom discussed is what all these developments will bring to the corporate treasurer? What API’s are available to corporates today? How do we expect this to evolve? Which use cases have the greatest potential?

One area where API connectivity for corporates is already quite prolific is in the execution of FX operations. Non-bank FX providers, ranging from the well-established INTL FCStone to the quickly-growing Ebury, have invested heavily in a suite of APIs for their corporate customers that empower them to request quotes in real-time, and to execute trades based on those quotes. A few of the more agile banks have started to develop API connectivity in this area, but the age-old (and dare we say antiquated?) practice of having your favourite broker on speed dial for quote requests still seems to be the ordre du jour.

In the FX space, as in all others, multichannel connectivity is key – and API is quickly becoming a prominent channel that can no longer be side-lined. Banks that wish to remain competitive in this area will quickly need to make sure that they have excellent API connectivity, keeping pace with other providers that can empower FX hedgers to get a real-time view of their options.

Whereas in FX operations there are three steps to an interaction (request quote, execute transaction, receive reporting), this is typically not the case in payments, where the first step is largely replaced with pre-negotiated rates. However, we have noticed that Fintechs are integrating this quote step into their payment processes. Mastercard Send, Ripple, and Transferwise are all reachable through an API, and all provide a real-time quote for your transaction prior to execution. Although the use-cases are currently focused on retail money-remittance payments, we hav...

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Keywords: Open Banking, Fintech, Interbank