A bank API is a critical element of Open Banking or API Banking which allows third-party companies to build new services for banking customers. These services include data visualizations, flexible methods of categorizing transactions for the unique scenarios of businesses, moving assets between accounts (or different banks or even different currencies), and so on. Banking APIs are at the heart of contemporary and future growth in fintech.
API stands for “application programming interface” which, in plain language, is how two pieces of software can communicate with each other. The third-party software calls for information from the bank’s software using protocols and definitions from the API and the bank’s software responds to the third-party using the same definitions and policies. It enables the two pieces of software to communicate and share financial data clearly between each other while keeping control of that data within the scope of the bank policies.
The development of an API allows clients of financial institutions to get enhanced services from specialized software companies. Trovata, for example, is a company that utilizes bank APIs to provide a cash management platform.
What is an API in Finance?
Decision-makers in businesses and the finance industry have unique and specific needs beyond those of regular bank clients. In order to leverage things like automated cash forecasting and cash flow analysis, business management software needs to connect to the data that resides at banks.
That level of access is possible through a banking API. It empowers services like mobile access, data normalization, virtual account management, cash forecasting across multiple accounts, enhanced tagging and scenario planning, and the creation of specialized cash management software. All of this benefits treasurers and other finance professionals by providing unique tools that help them get the most out of their time, cash, and other assets.
By automating the collation of banking data utilizing APIs, treasurers and other financial professionals can focus on more strategic tasks that propel the business forward. Instead of spending time manually cleaning data or trying to coax a chart from a spreadsheet formula, time can be devoted to strategic analyzation in order to figure out where to move assets to ensure they will benefit present and future growth opportunities.
There are many tasks that slow a company down today–finding their transaction data, downloading statements from multiple bank portals, importing them into several spreadsheets. Once there are multiple spreadsheets used by multiple people it becomes difficult to coordinate decision-making and planning.
Or perhaps a company is using a legacy treasury management service. In that case they’re probably wasting time trying to fit their unique business into the myriad constraints and conceptual shortcomings built into the TMS. Maybe these things weren’t a problem a decade or two ago.
But today, in a globally competitive business environment where new threats and opportunities can emerge on an hourly basis, there’s no time to spend fiddling with a data import or re-translating data into a language your C-suite and board can understand.
The true benefit of APIs in finance will be realized by treasury departments that can be forward-focused and trust that their data is normalized, accurate, and up-to-date. Then they can take advantage of increased strategic capability to improve the bottom line of the company while identifying and managing risks.
Which Banks Have APIs?
In order to make use of the increased capabilities provided by emerging companies, many banks are rushing to get an API launched, but planning and implementing them are not a simple undertaking. Issues of policy, security, and privacy as well as all of the technological considerations influence the quality and robustness of the API
Here are some banks that have an API:
- Bank of America
- Bank of Montreal
- Bank of the West
- Capital One
- Citi Bank
- City National Bank
- Commerce Bank of Washington
- Deutsche Bank
- Farm Credit West
- Federal Reserve Bank
- First Republic
- Frost Bank
- J.P. Morgan
- Morgan Money
- Northern Trust Bank
- Silicon Valley Bank
- Standard Chartered
- TD Bank
- Union Bank
- US Bank
- Wells Fargo
If you want to see the benefits, schedule a demo of Trovata today.