Estimated reading time: 6 minutes

In the realm of trade, treasury and payments, the quest for seamless transactions and the bridging of technological divides has taken centre stage.

At Sibos 2023 in Toronto, the panel “Corporate to Bank APIs for Guarantees – Are we Future Ready?” focused on the role of standardisation in driving technological development for the industry.

Moderator Avanee Gokhale from Swift led the conversation, with insights from panellists Baptiste Audren from Komgo, Juliette Kennel from Swift, Joon Kim from BNY Mellon, and Samuel Mathew from Standard Chartered Bank. 

Covering the topics of Application Programming Interface (API) standards, the future of APIs, interoperability and networks, ISO 20022 standards, and the importance of corporate participation, the panellists broke down the complex themes and shared their insights on the path forward.

API Standards

The development of API standards is emerging as a pivotal advancement in establishing a collaborative environment for the trade industry. 

Mathew said, “APIs are a common language, as simple as that. It is very important for the trade industry, to have a common language between various layers. Once you have a common language, there are lots of efficiencies to be gained.”

These standards, crafted with the collaboration between diverse stakeholders, including banks, corporate platforms, and notable organisations like Swift and the International Chamber of Commerce (ICC), aim to foster efficiency and interoperability across the sector. 

He further elaborated that this is needed to ensure a smooth transition towards a standardised trade environment.

While viewing the challenges associated with integrating these APIs, there is a recognised need for an industry-wide effort, heightened education, and awareness to elucidate the business case and value for adoption. 

The transition to such standards is a stepping stone towards a more standardised and digitised global trade landscape, but first, there needs to be a concerted effort to enhance education and awareness to drive adoption.

Interoperability and networks

There is a common misunderstanding among those involved in global trade and finance when it comes to the usage of API standards where many believe that these standards are only applicable within certain networks.

Kennel said, “That’s not at all the case. The APIs that we built follow ISO 20022 methodology, which is the global and open standard. While we love you to use the Swift network, you can use other networks perfectly well.”

ISO 20022 is an open global standard that provides a framework for rich, structured financial data. It enhances the quality of financial messages by enabling more granular and well-structured data, thereby improving analytics and compliance. 

The standard has seen widespread adoption, with numerous global initiatives either implementing or considering its use for payments and securities. 

The misunderstanding around API interoperability stems from a lack of clarity and awareness around the inherent characteristics of API standards. 

However, API standards are underscored by their openness and flexibility, allowing for versatile applications across a diverse array of networks.

Addressing this misconception is crucial, as it fosters a more accurate understanding of the expansive and inclusive nature of API standards, thereby encouraging broader adoption and integration within the industry.

ISO standards

There is a spectrum of opinions regarding the next steps in API policies in the trade industry. While some stakeholders advocate for the immediate adoption and commercialisation of the current API standards, others have different priorities. 

Kennel said, “Before we start thinking about moving to ISO 20022 for the trade business, we need to be really conscious. There needs to be a strong business case and a strong consensus to do it.”

Although the ISO standards may provide short-term benefits when they are implemented, the panellists feel it will be more beneficial to the trade space in the long term to wait until they are more widely accepted.

Mathew said, “I think we should wait and take the time to let these API standards sink in and be adopted by the industry. Let’s not underestimate the amount of technology change that will be needed. The good thing is when we designed our guarantee APIs, we had future ISO trade specifications as well as causing least disruption to existing clients and bank systems in mind. Nevertheless, it will still take time and effort to fully transition to these APIs and we need to make sure we are committed to the transition.”

Delaying implementation will allow the standards to mature and begin to demonstrate their value meaning that the industry will be able to implement tested standards that should be more refined, debugged, and future-proofed.

The transition to ISO standards for trade messages is seen as a significant step, yet while there are varied opinions on the timing and necessity of adopting ISO standards, the panellists agree that it might be best for the trade industry to delay.

Yet, the diversity in perspectives underscores the multifaceted nature of the industry and the necessity for a nuanced approach to advancing API standards for addressing the varied needs and priorities within global trade.

One critical group with its own unique set of needs is global corporations.

Interfacing with corporates to pave the API roadmap

Involving corporates is widely considered to be an instrumental aspect of the API adoption process within the trade industry. Their representation in the working groups is essential, as it brings diverse perspectives and needs to the forefront, contributing to developing more inclusive and influential standards. 

Audren said, “We see very large corporates coming to us to say it’s not about the price anymore, but it’s about the SLA requested to banks, which should be less than 48 hours. It’s about the digital connection that is required with every bank. They now select their bank based on these types of attributes or capacities. It’s definitely a significant trend when it comes to adoption.”

By understanding the tangible benefits and value of integrating the API standards, corporates are more likely to embrace and implement APIs, thereby driving forward the standardisation and digitisation of global trade.

Looking to the future of API standardisation and adoption, Mathew said, “It’s going to take some time to get everyone to adopt APIs, but I think if we can get a few key players to incorporate this within the next six months, it will really help the entire industry move forward.”

The panel at Sibos 2023 offered a nuanced discussion on the future of API standardisation in the trade industry. 

From the importance of corporate participation to the challenges and opportunities presented by ISO 20022 standards, the conversation underscored the complexity of the path ahead. 

As we look towards the future, it is clear that addressing these multifaceted issues will require a collaborative effort that encompasses technological advancements, educational initiatives, and regulatory frameworks. 

Only by working together can the industry pave the way for a more sustainable and prosperous future.