APIs: what they are and why they matter to corporates

APIs (Application Programming Interfaces) are widely talked about today, partly because of the important role they play in facilitating Open Banking. They are not a new phenomenon, however. In fact, they date back to the 1960s, predating the invention of the World Wide Web. Some of the world’s most popular websites and smartphone apps, including Amazon, eBay and Facebook, have long used APIs to make their user journeys more seamless. 

Put simply, an API can be described as a piece of code that enables two different systems to communicate with each other. Sometimes described as digital messengers, they connect an underlying data source – for example, a source that provides information about the weather – with a presentation layer that conveys data in a visually appealing way. APIs are powerful business tools because they enable organisations to partner with each other to deliver better experiences and services to their customers so that they can generate growth and gain market share. For that reason, many large organisations, including Barclays, have set up their own dedicated platforms to make their APIs available to external developers.

APIs and Open Banking

A particularly powerful use case for APIs is Open Banking because of the way in which APIs are being used to transform the payments landscape. The UK’s Open Banking regulations came into effect in January 2018, with the implementation of the Second Payment Services Directive (PSD2). Open Banking enables clients to access the same level of functionality through Third Party Provider (TPP) applications, as they would have otherwise accessed via their bank’s online channels. As a result of Open Banking, consumers may be able to shop online without using a payment card since they will be able to initiate payments directly from their bank accounts. They will also be able to take advantage of services provided by aggregators to get a consolidated view of all their financial accounts, including their current accounts, credit cards and mortgages.

APIs work together at multiple levels to provide experience, process and system functionality. They enable:

1. Faster and more effective innovation. As APIs make it easier for developers to integrate new applications into existing systems architecture, they help the IT and operational teams of a business to collaborate more effectively with each other. They therefore support the rapid development and deployment of innovative products and services, which may build on the products and services offered by another organisation. 
   
   
2. The aggregation of information from multiple information sources. APIs allow a wide variety of data to be viewed and compared in a user-friendly format.
   
   
3. Improved workflow for a range of different processes. By connecting different technological tools together, APIs enable system users to be more productive because they don’t have to log in and out of different platforms.
   
   
4. Enhanced customer service and opportunities for revenue generation. By pulling together information about a customer from different sources, APIs can be used to create a single view of that customer. As a result, they can open up new revenue streams for organisations and give them insights into how they can improve existing products and services and develop new ones. 

When it comes to managing payments and other cash management-related workflow, APIs present corporate treasurers with a convenient alternative to traditional online channels (for example, Barclays.net and business online banking), SWIFT and host-to-host connectivity. While these traditional channels all allow treasurers to view their balances and transactions, and to initiate payments, APIs offer a potentially more convenient and user-friendly way for corporates to integrate their back-office operations with those of their bank, to achieve a two-way data flow. 

For this reason, Barclays is exploring API functionality for products and solutions that we currently offer to our customers through traditional online, host-to-host or SWIFT channels. Our objective is to achieve integration and straight-through processing with our customers’ back offices so that we can provide services to them on a near real-time basis. 

The benefits to our corporate customers of using an API-based cash management services include:

1. Visibility. APIs will enable corporates to view balances in real time, and undertake real-time reconciliation and payments.
2. Reduced technological infrastructure. An API-based service may require corporates to make less investment in technology for back-office integration than they would if they used SWIFT or a host-to-host environment. 
   
3. Flexibility. APIs will give corporates the ability to make real-time payments through their own customer-facing applications for multiple use cases, such as paying gig workers at the end of shifts or the completion of certain tasks, paying refunds, and settling insurance claims. 
   
4. Improved workflow. APIs enable straight-through processing and integration with the back office, without requiring the same level of technology integration that SWIFT or host-to-host services demand. 
   
5. A great user experience. The best APIs provide a great experience to developers, who use them to provide a great experience to a corporate’s customers.
   

Barclays welcomes innovation and we publish all our open-source APIs, together with standards for using them, on the Barclays API Exchange.

A number of direct-to-corporate APIs are also being developed, which enable our corporate customers to directly access Barclays’ functionality and services via an API that is integrated with their back office, rather than by specifically logging in to our banking channels. The benefits of our APIs include:

• Instant Faster Payments
• The ability to make payments using a proxy (meaning that a mobile phone number can be used instead of full account details)
  
• Improved internal accounting
  
• Specialised reporting that enables customers to optimise their business
  
• Saving corporates time and money and providing them with extra added value

Our four direct-to-corporate APIs that will be available for our corporate customers to use in 2019 are:

• View Account Balance. By integrating this API with their enterprise resource planning system or treasury management system, our customers can access their balance whenever they want.
• View Transactions. Customers get an instant view of their transactions according to specific transaction parameters, such as currency or payment type. For example, they can use the API to view all Faster Payments made within a defined period of time.
• Send a Payment. With this API, our customers can send immediate electronic payments to beneficiaries using proxy details, such as a mobile phone number. As a result, there is no need to collect specific bank account information from the beneficiary.
• Make a Faster Payment. This API enables our corporate customers to initiate a Faster Payment, enabling immediate payments for pay-outs and returns.