Digital banking is going to look a little different in the next five or so years, which was a theme of our Director of Product Management, Greg Weddell’s, presentation at the recent Concepts 2022 Conference in Ann Arbor Michigan.
Greg discussed topics including the rise of APIs, integration and the future of digital payments – in his session “B2B Digital Channel Modernization.” Greg highlighted how the tools available for digital modernization of commercial banking platforms have changed considerably in recent years and advised banks on how to evaluate digital modernization platforms and what corporates should be aware of when selecting a Treasury Management digital platform.
Here are the key takeaways from the session:
The Rise of APIs
APIs are on the rise and have been for a few years now. It’s because of the versatility in which banks can utilize them, from enabling seamless communication between systems in real-time, allowing applications to open and share data/functionality, transferring manual processes to automated ones and more. In short, APIs can replace FTP connectivity and offer a “real time” alternative to other payment messaging systems. Overall, they just make it easier for banks to do business, as they standardize access across devices, operating systems and machines, and are very secure. Greg predicts that in the next decade, APIs could become the dominant payment channel.
Different industry verticals can see value from an API, including eCommerce, manufacturing, entertainment, healthcare and many more. APIs enable time saving with fewer manual entries and results in reduced errors. Additionally, customers also have greater control and speed of the process.
When it comes to customer integration access options, banks can take advantage of using just APIs, just a Digital Channel User Interface (UI) and a combination of APIs and the UI. The best option is obviously the combination, so that banks can offer customer experience options, have a seamless transaction experience and to potentially establish a full API ecosystem quickly for bank innovation if they have a digital platform that is fully open, API-enabled.
The Integration Game
There are several API engagement options for banks, corporates and FinTechs, as each of these categories require different integrations. For banks, it’s meeting customer demands for new levels of integration and a new channel to provide real-time capabilities and support high volumes. For corporates, the priority is the ability to “consume” new levels of integration and operational efficiencies along with real-time data to improve reconciliation. Lastly, FinTechs work with vendors, banks and corporates and provide value-add to reduce upfront development. They also provide solutions across multiple products and services.
In addition to APIs, single sign on integrations are a beneficial tool to have as they can act as the gateway to all business services, including bill pay, integrated payables and receivables, commercial cards and merchant services. It’s all about making transactions simpler for banks.
The Future of Digital Payments
There’s understandably a lot of buzz around what’s in store for digital payments. Right now, 65 countries and territories have live Immediate Payment schemes, which comprise over 89% of Global GDP. By country, India has the largest market for immediate payment volumes by a landslide. The United States is number eight on the list – but it’s growing.
At one point, while paper checks remain the top mode of payment, electronic payments continue to make strong inroads and are expected to continue to grow in popularity in the next 5+ years. In fact, it’s expected that 8.9 billion electronic payment transactions will be made in 2026. For comparison – 2021 had about 1.8 billion. And in terms of real-time payment transactions, they only took up .9% of payments in 2021, but by 2026, it’s expected to reach almost 4%.
Dragonfly Financial Technologies had a great time at Concepts 2022 and are looking forward to seeing colleagues at the next one. Looking to partner with the ideal digital banking platform? Get in touch with a Dragonfly representative today!