APIs: Greater Payments Connectivity & Functionality

By Bob Stark, Global Head of Market Strategy, Kyriba October 13, 2021

The push for superior ERP-to-bank connectivity solutions continues to accelerate as CFOs prepare for the post-pandemic era. Gartner projects that corporate enterprise software spend will top $516 billion this year and $571 billion next year.

With application programming interfaces (APIs), CFOs and CIOs can standardize bank and payments connectivity, while opening the door to even greater functionality that vastly enhances the payment journey from ERP to bank.

Improving Payments Projects

With the constant threat of payments fraud, an ERP implementation or migration must include strong integration and connectivity. Automation and financial controls need to be carefully applied when executing corporate payments through the supply chain.

However, ERP-to-bank integrations have a tendency to stall due to myriad challenges and complexity; a recent CIO Pulse survey found that 91% of IT leaders view bank connectivity as one of the most complex components of an ERP project. As a result, CIOs frequently aim to de-risk payments projects.

Understanding Modern Connectivity

When assessing new connectivity and payments solutions, CIOs first need to determine how much the bank connectivity landscape has evolved since their organization adopted its current ERP platform. If it’s been a decade or longer since that implementation, you’ll likely discover a plethora of new solutions that enable a host of new ERP-to-bank connections. Begin by putting together a matrix listing banks, banking services, connectivity protocols and banking formats to determine the ways in which connectivity has shifted in recent years.

CIOs and CFOs also need to understand that project requirements will be vastly different than they were during their last ERP implementation. Payments have evolved in the past five years beyond being simple transmissions of files from your ERP. With the rise of faster and real-time payment platforms, larger daily limits for low-value transactions and greater transparency overall, organizations need to rethink their approach to mapping the entire payments journey.

Furthermore, as payments evolve, so do the threats. Last year, 74% of organizations were targeted by fraud schemes, with accounts payable (AP) teams being particularly susceptible. Given the current threat landscape, payments must now undergo a series of careful screening, monitoring and compliance activities.

The API Factor

APIs can streamline the ERP-to-bank integration process via pre-built connectors. Because the interface between bank and ERP has already been tested prior to implementation, bank connectivity project timelines can go from years to months, or from months to weeks.

Furthermore, APIs can provide finance teams with access to services like The Clearing House’s Real Time Payments (RTP) network, SWIFT’s global payments innovation (gpi) and real-time bank reporting. Some banks are currently only using APIs for RTP, but they can exist alongside protocols like FTP and SWIFT.

Beyond Real-Time Connectivity

But APIs are far more than just bank connectors. They provide can CFOs and CIOs with greater access to data and introduce new services into the payment journey.

By opening their platforms via APIs, payment providers have enabled developers and other providers the opportunity to offer additional solutions for ERP systems. Among the most prominent offerings enabled by APIs are payments fraud mitigation services. Proper approval and screening processes are key to safeguarding transactions—the advent of real-time payments and the absence of any ability to claw bank payments after transmission only makes these protections even more imperative.

Via APIs, three fraud mitigation solutions have been introduced that can help organizations comply with CFOs’ internal governance procedures:

  • Bank account validation: Users can now confirm in real time that they are crediting bank accounts belonging to the intended recipients. With the continued rise in business email compromise (BEC) scams, this is a critical protection for organizations. Before API connectors, bank account validation was not part of the ERP-to-bank payment journey.
  • Payment policy screening: CFOs build payment policies that encompass procedures for reviewing, approving and denying transactions. These policies have increased in complexity as new fraud threats have emerged. Screening every outgoing payment against these policies requires that the entire process be digitized. API-driven connectivity platforms have the capacity to identify and quarantine any suspicious payments.
  • Irregular payment patterns: Fraudsters are increasingly using artificial intelligence in their schemes. CIOs can match them point for point by incorporating machine learning algorithms. Each payment can be screen against an organization’s entire payment history so that any suspicious payments will be quarantined for further review.

Payments Evolution Is Ongoing

As payments continue to incorporate new technological innovations, CFOs and CIOs will need to work hand in hand to meet the challenges of tomorrow. With greater demand for data and analysis of transactions, APIs will be paramount for finance teams who want to stay current.

The current landscape requires CFOs and CIOs to automate the entire payments journey from end to end, while simultaneously paying faster, mitigating fraud threats and reducing costs. APIs allow finance teams to accomplish all of these goals, while also providing a gateway to additional services.

Kyriba can help you address challenges to your connectivity, banking, payments, liquidity, and working capital. Learn more at www.kyriba.com.

References

  1. https://www.gartner.com/en/newsroom/press-releases/2021-04-07-gartner-forecasts-worldwide-it-spending-to-reach-4-trillion-in-2021
  2. https://www.kyriba.com/wp-content/uploads/2020/10/kyriba-2020101-bridging-gap-between-your-erp-global-banks.pdf
  3. https://www.afponline.org/publications-data-tools/reports/survey-research-economic-data/Details/payments-fraud/
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