Introduction
It’s no novelty that ESG gets a lot of airtime in today’s world, and for good reasons. Everyone must consider how our actions represent our responsibilities on the sustainability of our environment, our relationship to others and to how we discharge our duties.
Many of us in finance technology companies, in banks and in corporate treasury or finance can easily get lost on what we can do to contribute to these important responsibilities.
FinLync champions the use of corporate banking APIs as part of its key mission to bring the consumer banking experience to corporate treasury and finance professionals. Here’s our take on where this mission fits with regards to ESG goals.
What is ESG?
ESG stands for environmental, social and governance. These are all factors that have an impact on the way a business operates, its performance, and its overall success. Many companies are now looking at these factors when making decisions about which technologies to invest in to ensure their technological investment is not only highly effective for the business, but also ethical and sustainable.
Traditional finance computing
Almost a quarter of the way into the 21st century, most of the corporate banking and finance computing work is still done using batch processing. This is mostly a legacy mindset, that is deeply entrenched in finance culture. While some finance activities seem to only make sense as a batch execution process, such as payroll, many activities are not bound to monthly rhythms except by convention and habit.
What if payroll, vendor payments and reconciliation could be done as an “always-on” stream process, instead of batched by months or weeks? This is exactly what modern corporate banking APIs enable today.
Bank APIs: more effective processing with a lower carbon footprint
Stream processing relies less on high intensity bursts of computing power, which has an impact on energy requirements and carbon footprints. While there’s still a time and place for batch processing (e.g., machine learning jobs to detect patterns and inform decision making patterns), reducing reliance on these for standard data messaging and processing would go a long way towards reducing energy expenditure. These savings can express themselves not just in lower cost of operations, they can also be translated to unused carbon credits or simply the clear conscience of using resources efficiently.
The continuous flow of information, with reduced feedback loops, that is offered by APIs can also be directly mapped to important governance values. After all, real-time cash visibility is not just business practice, it’s also a proof point of a well governed finance operation. The constant awareness of cash pools to be invested for yield, current exposure in foreign currencies, or simply being able to track the status of in-progress payments or automatically close open items in accounts receivable are immensely useful as business advantages, and they also make for a well governed shop.
