They’ve been widely deployed across the financial services industry to provide data and functionality easily and cheaply. Now a single application programming interface (API) can provide treasury departments with an end-to-end view of their trading on a single screen, speeding up processes, reducing risk and cutting costs, writes Ed Lopez.
Today’s tumultuous environment presents an ideal moment for treasurers to deliver unheralded business value by finding hidden efficiencies and savings. Simple to adopt technologies are fast becoming the norm. The solutions are enabling treasurers to automate long standing process challenges while their open architecture degisn lets them integrate with existing system sets more easily. The fundamental point is that wholesale change is not necessary.
For instance, having integrated information sources feeding into a one-screen solution with automation built in is a reality. Treasury teams no longer need to flick between multiple systems and logins, forcing them to enter information such as prices, analysis and trades manually from one application to another, slowing down decision making and transactions and adding layers of inefficiency, risk and, increasingly, unnecessary cost.
This kind of friction is especially unhelpful when treasurers need to make incisive decisions on short-term investments such as Money Market Funds (MMF). Indeed, in our recent survey, 77 per cent of treasurers said they want better integration between their treasury management systems (TMS) and the MMFs they use and 62 per cent said actioning a payment was one of the least automated parts of the MMF trading process.
Breaking that down, 56 per cent cited confirming the settlement; 54 per cent cited entering a trade into their treasury management system; and for 53 per cent it was sending a trade. Automating these processes would reduce errors and speed up decision-making.
Now consider why this is so important for treasury teams in the current environment. Rising interest rates naturally create demand for MMFs while market uncertainty drives the need to optimise liquidity. This all reaffirms the ongoing industry noise around having instant visibility on cash positions for accurate forecasts as well as faster payment mechanisms where an obligation is the same day.
For investors into money market funds, application programming interfaces (APIs) can be the key to integrating treasury management systems with the wider money market fund community, such as fund managers, portals and banks, thereby automating the trade, post trade reporting and settlement processes. These are all manual activities that create unnecessary cost and risk.
Few firms have cracked this code apart from Calastone, which has a unique history of quickly connecting TMS users with the money market fund community using API and other traditional connectivity methods. In short, treasurers can start trading MMFs with any portal or fund provider in real time without the historic connectivity headwinds. Sometimes this task has been completed in the matter of a few days as well…
Essentially, the API sets the parameters for how different pieces of software or systems can connect and interact. They allow developers to get information – data and services – from third-party sources, without the need for a major systems integration project. In other words, systems connected via good APIs have far less bespoke code, making them much cheaper to set up and run. They also tend to be more robust.
Calastone’s API is the lynchpin for treasury departments and their different processes, data streams, funds and analyses, connecting MMF trading with the TMS. It means that treasurers don’t have to use multiple systems each with their own login before returning to the TMS to update balances when trades are placed or redeemed.
This kind of functionality, consolidated in a TMS, Portal, etc. is already helping the more advanced treasury departments become more efficient. The pressures mentioned above mean more are likely to follow suit.
Importantly, we enable firms to connect using any method they choose not just API. We have a long experience of doing this and having firms up and running quickly, some times in days.
Speak to us to find out how a single connection to your treasury system can give you an end-to-end view of the trading process. We can provide a test environment and support you while you check it out. It’s all standard. There’s no pre-integration needed. No need to adapt data or change formats.