How to future-proof your business payments in the age of open banking and API solutions

Open banking and API solutions are revolutionary technologies that have helped overcome the dominance of banks that existed in the past. According to the 2018 McKinsey & Company “Global Payments Report 2018”, transaction-based revenue is expected to grow to 46% by 2022.

For businesses to thrive in this new decade of transparency and innovation, adopting and leveraging the right payment technology partner is critical to stay competitive and optimise their internal operations. While everyone is talking about reasons why businesses should opt for open banking and API solutions, let’s dive into the ‘HOW’ of this innovation that has made payments in today’s generation simpler and far more secure. So what steps do businesses need to take in order to future-proof their strategies in the age of open banking and APIs?

Let’s dive into the ‘HOW’ of this innovation that has made payments simpler and far more secure.

Phase 1 – Assessing the innovation adoption curve

Perhaps the most important tool that businesses need in order to choose  the right payments partner is to evaluate the ‘Innovation Adoption Curve’. This curve outlines the willingness of corporates to accept and adapt to a new technology or an idea. A thorough analysis of the technology and its offerings is crucial to determine whether the solution fits seamlessly with the requirements of a company. When conducting this evaluation,  consider these questions –

1. a) How can I benefit from this innovation? Is it beneficial from a revenue perspective?
2. b) What are the security and privacy guidelines I must adopt for my business and customers?

Businesses must have a blueprint in mind for a collaborative approach that allows them to maximize synergies within their existing business model. By analysing their internal core competencies, having a well-defined product or service offering, and proper segmentation of industries and customer type, businesses can determine the payments partner that provides them with an efficient value proposition suitable to their requirements. Previously only large capital institutions could provide significant payment innovations; now companies of all sizes can offer an endless range of new possibilities.

Phase 2 – Determining the type of API solution your business needs

While API is streamlining the international payments process for businesses across the globe, it is necessary to evaluate what type of API a business should invest in based on their unique requirements and operations. In order to determine this, businesses need to analyse their revenue potential and determine the resources they can put into the development phase,making sure there is due diligence on both ends. The availability of transparent and scalable models, designed to increase efficiency and revenue, not only helps businesses gain a competitive advantage but also provides international growth. Thus, it is important to choose a partner that offers the entire product suite through API. There are two  types of APIs that a business can opt for:

• Partner API – This solution integrates seamlessly into a business’ front-end technology, providing its clients access to a full suite of FX and international payment services. It helps with customer on-boarding, increasing revenue and supporting regulatory compliance. This type of solution is best suited for companies whose clients are involved in international trade, such as FinTechs, financial institutions, and treasury platforms, among others.
• Direct API – This solution connects to a business’ existing payments software or ERP, providing employees easy access to a range of international payment, risk management and FX services. This type of API is suitable for corporates, gig economy platforms, travel companies, technology platforms, to just name a few.

Phase 3 – Onboarding and establishing engagement guidelines

Businesses are now compelled to provide not just a product but valuable customer experience when it comes to their service offering. The advent of open banking and API solutions helps corporates and banks alike to deliver on this promise; however, one must perform their due diligence when preparing legal and partnership agreements to avoid any irregularities or risks. A comprehensive compliance regime, including several layers of security protocols, must be in place to authenticate and maintain the integrity of information.

Phase 4 – Adapting the partnership framework

API and open banking foster business and technology outcomes that enable productive collaboration among diverse stakeholders. The pre-engagement and post-engagement process must be professional, and proper reporting and technical support guidelines must be in place for smooth integration on both ends.

By leveraging API and open banking protocols, global payment providers can supply critical services to businesses that allow them to convert and send funds instantaneously, book trades in advance, and distribute payments all over the world. Partnerships strengthen market position, and through new technologies and infinite possibilities, the right payments partner, can help businesses adapt to the ever-changing payments industry and thrive in this decade and well into the future.