Treasury Management's Reliance on Open Banking

Banking CIO Outlook | Thursday, January 24, 2019

Corporate treasurers serve as financial risk managers and take on a more strategic role in treasury and cash management technologies. With emerging technologies on the rise, they can often get stuck with old tech and fail to keep up with financial executives. Data creates problems in some instances. When an organization scales through organic growth or mergers and acquisitions, a heap of economic data with fragmented storage is brought forth.   

Analysts expect that cash management in the future will be real-time. This means that financial executives need to access all of their data quickly. Experts believe that using traditional financial management tools will lead to manually pulling data from online banking sources into excel spreadsheets and analyzing it. The manual processes of analyzing data creates a significant opportunity for application programming interface (APIs) and open banking initiatives in the corporate cash management landscape. 

Large firms can easily implement complex treasury management, but it creates challenges for small organizations. Data flows via APIs enable streamlined access to financial data and do it faster than some legacy systems available in the market. Open banking is not mandatory in the U.S, and the banks can keep the data to themselves rather than sharing it with a third party platform. However, banks are willing to use data-sharing ecosystems. Banks are targeting corporate clients with their connectivity and data-sharing initiatives.

Data security will come into focus as open banking continues to snowball. With increased data flow between platforms, security experts have to ascertain the protection of sensitive customer information. The U.S. financial service providers will try to follow the footsteps of U.K. and European markets that have already implemented open banking regulations. These markets will help the U.S market understand emerging data security questions. 

Check out: Top Treasury Management Technology Solution Providers - 2018(Arcesium, FINCA Impact Finance, Hanse Orga Group, Kyriba).

It is beneficial for the banks to associate with FinTechs as they have access to customer data. The bank-FinTech collaboration and open banking will grow exponentially in the future because of faster payments initiatives increasing data flow in the financial services markets and the financial executive's efforts to obtain data in real-time.

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