The emergence of API usage in trade finance

When Mark Cuban declared that “Data is the new gold” he highlighted why information is possibly the most valuable asset a business has. As a result, an increasing number of companies are now incorporating applications using data to provide more tailored solutions in trade finance.

Welcome to the world of APIs (application programming interfaces) that simply act as a plug-and-play interface between systems. These unsung heroes make it possible to extract value out of data that is scattered across multiple systems and deliver it into one output. Developers are then able to create “one version of the truth” from numerous applications.


The ROI of this approach is increasing efficiencies that enable the creation of new business opportunities or improving existing products, systems and operations. Ultimately, understanding the value of data allows businesses to make better decisions and even develop innovative trade finance models.

However, for any API strategy to work, there must be a holistic approach throughout the entire organisation. APIs also need to be combined with enterprise connectivity to free the data from an entire estate of applications and systems. The end goal must be to ensure that data is consumable and reusable for it to become truly valuable to a business.

Many are beginning to question if the trade finance industry is ready to leverage API’s while others feel that the industry is ripe for disruption. Time-consuming checks across multiple systems and manual processes are in dire need of an upgrade. But, could APIs be the silver bullet to provide the highly desired real-time flow of information?

The truth is that APIs are already presenting a world of new possibilities to financial institutions offering trade finance solutions. Early adopters are using technology as an enabler to quickly access customer data, draw insights, share data with other participants in the trade ecosystem and create innovative products tailored to their customers, market and regulatory needs. Not only are they reaping the benefits, but they are gaining an early advantage during this digital transformation of everything.

The most exciting aspect for end customers is enhanced products, services and much-needed transparency, that will enable them to manage their finances more efficiently.  Fintech companies, such as TradeIX are rising to the challenge of meeting the increased expectations of financial institutions and their corporate clients by creating a whole set of dedicated APIs and removing friction points between participants in the trade finance market.

They are leveraging lean and agile technologies such as cloud services and microservices to streamline operations, innovate, enable automated processes and reduce the overall cost of doing trade. Meanwhile, they help banks and their legacy systems that were not built for a digital age where agility is the new currency to keep up with the pace of hyper change.

APIs are empowering developers with the ability to innovate and add new features and functionality like custom trade finance applications to their ecosystem in weeks not years. New products or iterations of existing offerings can be rolled out, integrated and modified at a fraction of the cost and time it would take compared to a siloed system.

In contrast, businesses that insist on relying on legacy systems will inevitably continue to encounter problems when attempting to add newer software and services, such as SaaS applications. Ultimately, custom point-to-point integrations create multiple, fragile and complicated dependencies which cost businesses customers and resources — and are, by nature prone to failure. Once again, it’s APIs that can help with efficiently integrating these legacy data silos.

From a security perspective, single Policy Enforcement points can be introduced such as API management to ensure the integrity and security of information and govern API access centrally across systems. This is also a useful tool in combating fraud and enforcing necessary segregation of duty regulation given its ability to access and monitor information across systems.

APIs can also automate and speed up credit decisions by using third-party services to cover critical steps. Combining services like identity validation and credit ranking alongside internal insights into customer behaviour decreases new credit approval times from five days to one minute.

It is crucial to remember that banks have the one thing that agile Fintechs crave: scale. However, the biggest challenge is that banks cannot expect to emerge as the winners based on their size and ability to throw budget at the problem.

From a customer experience perspective, a ‘business as usual’ approach can be achieved side by side with any new product development. With the ability to support digitally enabled touchpoints regardless of their underlying technology (voice, touch, machine, etc.), open APIs have established themselves as a ‘super channel’ for product and service diversification.

APIs are the secret to successes of tech behemoths such as Amazon, Google, Twitter, Facebook, Uber and TradeIX in the trade finance market. They’ve helped promote partnership and innovation, build disruptive business models and platforms that serve digital consumers and businesses globally.

With the goal to move to banking as a service, the open API model offers opportunities for banks to take a big step forward in that direction. Similar to an Apple store for services, open APIs can provide banks with plug and play service capabilities across card issuance, mobile wallets, fraud monitoring, POS integration, customer support and more, all based from capabilities they already possess.

The reality is that banks must actively embrace the move to open APIs to secure their role and position in the new ecosystem of financial services and payments. Achieving this will require a roadmap to develop a clear vision of their future, reinvent themselves and use technology as a tool to make it a reality.

Open APIs are rapidly emerging as a vital cornerstone of the future of banking and payments services. Banks must move to build and incorporate them into their business models. The alternative is to face inevitable disruption or risk playing catch-up in the foreseeable future.

However, these trends are not just about technology; it is an organisational mentality that will require a transformation of corporate culture too. Innovation is not confined to a handful of people or even departments. It’s not just developers but the entire business that needs to be actively engaged in the art of the possible.

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