The Case For Open Banking API Automation

Written by Keegan Chamberlin
May 26, 2022

While it would be easy to say, “An API-first approach is the future of cash management,” it doesn’t mean much without context. Since economies are evermore connected and expanding, transaction data continues to expand exponentially. If your scaling organization still utilizes spreadsheets, it will take a lot of manpower to manage that data.

And with an increase of data and hands in the management pot, the potential for human error and financial risk increases.

Enter APIs: The technology banks have begun to use to make cash management more efficient and manageable.

A Short History of APIs

APIs, short for Application Programming Interfaces, enable different platforms to communicate with each other. Introduced during the transition from Web 1.0 to Web 2.0, APIs were created for developers to send data to each other.

APIs began to thrive in 2004, as platforms were beginning to be built on the internet, which is referred to as being “built in the cloud.” Many cloud-based platforms began utilizing APIs to send digital assets and other information between third parties.

For example, in 2004, Flickr utilized APIs to enable users to share their photos between platforms. In 2006, Facebook launched an API to enable developers to share profile information.

APIs began to evolve into APIs-as-a-product, where these platforms’ main value proposition was simplifying job functions. While APIs have continued to drive a digital transformation movement across many industries, banking has been one of the last largely affected by it. Nevertheless, we do have API banking available today!

The Rise of Open Banking APIs

APIs and cloud-based services brought about a digital revolution, enabling companies to provide products and services to businesses and consumers quickly and directly.

Some examples include YouTube, which revolutionized how consumers consume media, Facebook, which made it easier than ever to connect with friends anytime, anywhere, or even retail with Amazon, which helped make online shopping more convenient and efficient.

While many technologies in the consumer space have provided instant access to these ‘always on’ services, the same can’t be said within banking or treasury operations. 

Many companies have been stuck managing cash within legacy technology, like spreadsheets, leading to data being manually entered and consolidated, prone to human error, and siloed from key decision-makers.

Fortunately, in the past few years, banks have adopted and created their own APIs, allowing third parties to access their balance and transaction data.

This has enabled automated cash management platforms to create their own APIs that connect to banking partners and automate the aggregation and normalization of bank data. This technology continues to help businesses establish a single source of truth for all their balance and transaction data.

Banking APIs help businesses become more efficient by automating cash reporting, analysis, and forecasting, as well as payment processing and money movement.

How are Bank APIs Transforming Cash Management Operations?

The Case For Open Banking API Automation

Banking APIs Provide More Time For Analysis

Banking APIs cut out not only manual data management processes, but also present new opportunities. Instead of being bogged down by logging into many bank portals, and manually consolidating the data into a spreadsheet, you can finally focus on analysis. This is because open banking APIs connect to all your bank accounts, and collect cash balance, transactions, and metadata, into one platform.

Many of our clients found that manual processes took up too much of their time before utilizing Trovata’s extensive library of banking APIs.

“When I first joined Eventbrite, my day-to-day consisted of logging on to all of our different bank portals, running reports to see balances for each of our accounts, and then trying to standardize all of this data in excel to build summaries. Then I had to do this across all four of our main banks. I spent 2-3 hours a day pulling and normalizing bank data before Trovata, and that wasn’t a good use of my time.”

– Niall Burke, Global Treasury Manager at Eventbrite

Now, Eventbrite can focus on discovering growth initiatives through analysis instead of data management.

“With Trovata, we have been able to automate daily, weekly, and monthly cash reporting. It has become our easy-to-use reconciliation tool for our Accounting team.” 

– Niall Burke, Global Treasury Manager at Eventbrite

Banking APIs Increase Transparency Throughout Your Organization

As we mentioned in our previous article, “Why Spreadsheets Are Holding Your Treasury Back,” spreadsheets were never designed to be a centralized tool for a company’s data. It can be cumbersome to determine who has the most up-to-date bank data because of a lack of version control. While spreadsheets’ flexibility can be a blessing, it can also be a curse when analyzing large datasets. Siloed spreadsheets limit visibility, ensuring your team is making decisions with blinders on.

Open Banking APIs address these spreadsheet limitations by collecting and normalizing all your bank information into a Multi-Bank Data Lake™, which stores your balance and transaction data in perpetuity. With Trovata’s automated cash management platform, machine learning algorithms analyze bank data and distribute it throughout your different reports and forecasts. All key decision-makers have the same access to the same data in the cloud, increasing transparency throughout your entire organization. 

Banking APIs Increase the Accuracy of Your Cash Reporting and Forecasting

Trovata’s automated reports and forecasts are created with your bank data collected in perpetuity. Generated reports and forecasts take your historical bank data into account, which machine learning algorithms and artificial intelligence analyze to produce more accurate reports and forecasts. 

Through the data collected by banking APIs, Trovata establishes a forecast baseline that empowers you to perform accurate variance analysis and strengthen the accuracy of your cash forecasts over time. 

Initiate and Track ACH, Wire, and RTP Payments in One Platform

Banking APIs also empower you to initiate and track payments in one secure platform. This is only possible because open banking APIs can also initiate processes. Many banking institutions have developed their APIs to send payment details, empowering a greater transparency and scalability within payments that wasn’t possible before.

Trovata utilizes this technological advancement to initiate and track ACH, wire, and Real-Time Payments (RTP) within Trovata’s Payments App. Our app empowers you to increase payment transparency with comprehensive payment reports and customizable regulatory workflows all without any extra transaction fees. The only fees you are charged are the fees from your banks.

Banking APIs Help You Gain Complete Control Over Your Data

Through aggregating and normalizing your organization’s bank data, banking APIs give you greater control over your data. Not only can you customize your cash reports, forecasts, or dashboards, you have complete control over your data, even if that means taking your data out of Trovata for further analysis. 

With Trovata’s GridMode™, your bank data can be exported into a spreadsheet, making it easier than ever to perform any custom analysis or upload your normalized bank data to other financial platforms. And while we don’t encourage you to manage your cash reports and forecasts in spreadsheets, you should have complete ownership over your data.

Digitally Transform Your Treasury with Open Banking APIs

The fact of the matter is that treasuries that can analyze, report on, and forecast cash faster and more accurately can make better data-backed decisions, and begin to become more proactive than reactive within their cash management strategy.

Through open banking APIs, and incredible technology like machine learning and artificial intelligence, Trovata’s multi-bank, automated cash management platform can provide you global transparency across all your global accounts, empowering your organization to end repetitive data management, effectively manage cash, and streamline payments.

Download our guide, Building Tomorrow’s Treasury, to discover how you can digitally transform your treasury with a 10-step plan that details how you can create a business case around building a more digital future for your organization.

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