The pain of waiting...
Nobody likes waiting. Waiting for a food delivery, for a package to arrive, in line at the grocery store, or for the washing machine to finish a load of laundry. Given the option, most would opt to be notified when the process has been completed, or when their item arrives, rather than wait around. Treasury teams are no different. Treasury practitioners would rather receive a notification when a process is complete so they can accomplish other tasks while the job is processing.
Now you can, with webhooks, bank APIs and FinLync.
Understanding bank APIs
An API is a technology that connects two different systems and relays information back and forth between them. Bank APIs create an API connection between two specific parties: a bank and one of its clients.
Bank API connectivity is the natural successor to legacy bank connectivity channels like SWIFT, bank portals, and host-to-host, which have been the de facto methods for corporates to access bank data for more than 35 years. In this article, we’ll focus exclusively on corporate bank APIs.
Most APIs are request-based: one system requests information, and the API delivers a response from the other system, instantly. Another name for this process is polling the API.
For bank APIs, when a corporate wants to know its bank balance, the corporate’s system submits the request – polls the API – and the bank replies instantly with the answer.
On the other hand, push-based APIs stream or push information from one system to another. In bank APIs, the corporate no longer needs to submit a request for the information, the underlying data is constantly streamed, as it becomes available.
Combining push-based APIs and webhooks
A webhook set-up allows information to be sent when an “event” happens. The alert that pops up on your smartphone when your food delivery is arriving? That is a “push notification,” and is powered by pairing webhooks with push-based APIs. The term push notification originates from the use of push-based APIs.
A webhook’s event criteria is defined by the person who configures it. For your food delivery, you might receive a push notification at three milestones of your order (1) when the restaurant begins your order (2) when the driver picks it up, and (3) when the delivery person is arriving. Each of these milestones is an “event,” as defined by the engineer who setup the webhook.
Let’s dive deeper on the push notification you receive when your food delivery is arriving:
- First, an engineer working at the food delivery app configures the webhook to send an alert when the driver is one mile from your house with your order.
- Next, you submit an order and are paired with an available driver.
- Once the driver has picked up the food, a push-based map API in the driver’s app constantly feeds the driver’s location data to the webhook.
- Finally, when the delivery person reaches a mile or less away from you, the webhook’s event criteria is met, and a push notification alerts you that your food is arriving soon.
The benefit of push notifications
Now that we understand the mechanics behind push notifications, what is the key benefit they provide? Saving time and increasing efficiency
In our food delivery example, knowing you’ll receive a push notification when your food arrives means you don’t have to wait at your window until the delivery car pulls up, or waste time waiting in your building lobby for the driver. While the process is running, you can be accomplishing other things.
The same holds true for treasury.
Benefits of push notifications for treasury
- More efficient as treasury teams need not keep checking or polling for information
- Helps make faster decisions and be more proactive
- Requires fewer technical resources
- Flow of information is triggered based on events so it is truly real-time
- Reduce the flow of irrelevant information by subscribing only to the desired notifications
3 examples of uses for push notifications in treasury
- Example #1: Payment Tracking
Tracking critical payments has always been a challenge for corporate treasurers. Receiving payment status updates is crucial to ensure that invoices are paid on time, or to take appropriate action when a payment is rejected or put on hold. Webhooks can be setup to send push notifications based on various payment-related events like completed, in-progress, on-hold or rejected. This allows treasury teams to receive timely information and take appropriate action in the moment.
- Example #2: Account Transactions
Today, the way most corporates access their account transaction data is either via a bank portal or by receiving intra-day (MT942/CAMT52) and previous day (MT940/CAMT53) statements. Neither of these methods provide real-time information so treasury teams must keep waiting for the transactions they are looking for. Webhooks solve this problem by providing the ability to trigger an alert for specific bank transactions as soon as they hit the bank account.
- Example #3: Inbound Tracking
The ability to see incoming payments is now a reality. A webhook can be setup to send a push notification to trigger an alert the moment a sender initiates a payment to your organization. This enhanced visibility will improve the preciseness of cash forecasting and liquidity management.
Putting everything together
Now that we’re clear on how push notifications can benefit corporate treasury, it’s important to know that push-based APIs and webhooks alone are not enough. Polling-based APIs are also necessary to ensure access to historical data, or obtain data when an event is missed, for example during planned maintenance downtimes.