DBS Digital Treasurer: Asia’s Largest Companies are Embracing APIs

Research by DBS reveals the region’s most influential treasury units will notably increase usage of API technology to solve their biggest issues. Dynamic companies such as Gojek, Skyee and Bukalapak are just a few live examples.

Asia’s largest companies are embracing API technology as a major way to connect to their banking partners. Among the region’s largest companies by turnover, 34.8% of corporate treasurers said in 2019 that they were using APIs, with 42.6% expecting to use more of this method of communication in 2020.

The findings are part of first-of-its-kind research by DBS in partnership with East & Partners Asia. The first DBS Digital Treasurer report conducted in 2019 captures the prevailing thinking of more than 1300 of the region’s most influential businesses about the opportunities and challenges that digitisation offers their finance and treasury operations*. A follow up survey in 2020 is being conducted so look out for the results that we will be sharing.

 

APIs are increasingly popular with corporate treasury teams across the region; they are quick and easy to deploy and don’t typically require a lot of work integrating with existing ERP systems.

In step with API technology’s rise, mobile connectivity is also increasing in popularity with 39% of all surveyed expecting to be connected to banks via this method in 2020, up from 32.7% in 2019.

The research was evenly split between companies within the top 100 revenue ranked corporates in each market – with annual turnover greater than $1 billion – and middle market enterprises with annual turnover of between $100 million to $1 billion. Both segments admit they want more API-based solutions.

For the uninitiated, API stands for application programming interface and can be described simply as a set of routines, protocols, and tools for creating applications. An API determines how software components communicate with each other. The better the design, the smoother the communication.

This growing appetite for API solutions contrasts sharply with the more traditional methods of bank to client communication. Host-to-host (H2H), for example, is fast losing traction with treasurers; only 27.9% of those surveyed expected to be using this method in 2020, down from 31.7%.

But API technology isn’t automatically going to improve your operational performance; it’s what you do with the API that truly matters. DBS is working with some of the most dynamic companies across Asia using such technology to solve real-world problems.

A Gojek-it attitude

One example of this is ,Gojek, one of Southeast Asia’s most exciting startups that provides ride hailing services, logistics, shopping and payments. When it was planning to launch its ride hailing service in Singapore, Gojek had an aggressive timeline to work to and they wanted to work with a bank to provide cashless real-time pay outs to its drivers, thereby differentiating Gojek from its competitors and its ability to attract more drivers.

Working with DBS in Singapore as its primary banking service provider, Gojek adopted the bank’s RAPID (real-time APIs with DBS) solution which enables the business to provide a real-time payments answer via APIs, to solve their problem. At the end of each day, Gojek also receives a report with details of each transaction via a host-to-host connection handling reconciliation – a service which uses PGP encryption for end-to-end security.

Instant Disbursements

In a similar vein, Bukalapak, one of Indonesia’s unicorn companies and online marketplace, is using API technology to improve payment processing amongst merchants.

Bukalapak’s key objective was to improve customer experience and provide instant merchant disbursement of funds any day of the week, within six hours. Previously, this task required staff to work weekends to prepare payment files and execute via file upload on DBS IDEAL, the bank’s corporate banking platform. Bukalapak also wanted to reduce manpower requirements and failed payments, largely down to reconciliation issues.

DBS implemented its RAPID API suite for Bukalapak, enabling it to achieve its goals. The company now uses RTOL (the BERSAMA Network) for disbursements to merchants without a DBS account; ACT (account transfer) for disbursements to merchants with a DBS account, and BAV (Bank Account Verification) to validate the beneficiary’s account details, prior to executing a transaction.

As such, the solution enables Bukalapak to make payments quickly, seven days a week regardless of whether the customer has a DBS account, thus achieving a significant reduction in the number of rejected transactions and cutting down disbursement fulfillment time from six hours to one.

The Skyee is the limit

But APIs potential doesn’t end within the boundaries of one country. DBS is also supporting Skyee, a cross-border payment service provider that serves merchants in China and Hong Kong to collect sales proceeds from platforms such as Amazon, and Chinese companies to make payments to overseas vendors.

Given its huge volume of inbound and outbound transactions, and its manual processes, Skyee needed to automate transaction processing and reconciliation to obtain faster processing times and reduce “fat finger” input error. Operating in multiple currencies, it also needed to consolidate all its bank accounts used to manage them.

Working with DBS, Skyee implemented a multi-currency account solution allowing it to use a single account number, linked to multiple currency wallets, to manage its transactions. Each currency wallet is automatically created by the first incoming transaction, and additional currency wallets do not require the submission of further documentation. All the currency wallets are linked to DBS IDEAL, allowing Skyee to view balances and manage foreign currencies in real time.

Embracing API

As can be seen, some of the region’s most dynamic companies apply API technology to help streamline and improve treasury operations. In doing so, they are leading the pack in terms of innovation and change. But to start the change process, it requires a treasury team to assess its own way of doing business and build consensus around a vision to head towards.

An important starting point is to compare your digital strategy against your peer group – establish your strengths and your weaknesses and look for inspiration from fellow treasurers on how to improve.

Benchmarking Tool

Utilising the thousands of data points sourced from The DBS Digital Treasurer research, we developed a unique benchmarking tool that allows you to compare your operations with that of hundreds of other businesses across the region and answer the question ‘How digitally ready are you?’

After answering some questions within the tool regarding your operations, you will receive a unique digital benchmark score for your company as compared to your peer group average. You will then be directed to some observations to help you establish the next steps to building out your digital treasury strategy.

Click here to try our benchmarking tool and see where you stand in terms of Digital Readiness.

* Note to reader:

The research is based on direct interviews held in 2019 with 1,304 businesses, an even mix of the top 100 revenue ranked corporates ($1 billion and above in annual turnover) and mid-market enterprises ($100 million to $1 billion) across 13 country markets in Asia Pacific: Australia, China, India, Indonesia, Japan, Hong Kong, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam. 97% of those surveyed had treasurer as their designated job title. The second round of this research is taking place in 2020 and we will be sharing similar follow up results.

 

This article was first published by The Corporate Treasurer on 9 June 2020. The Digital Treasurer Index Research 2019 was conducted by East & Partners, in partnership with DBS and The Corporate Treasurer.

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