Banks are essential partners to companies and the most reliable and cost-effective way to send and receive large volumes of payments.
Yet, opening a corporate bank account and setting it up to automate payments through the bank's direct connectivity solutions such as file servers and APIs can be a long and complex process. Not only do companies need to go through an extensive due diligence process, but they also need to know the bank's offerings and the inner workings of the bank's systems. As a result, companies can spend months before they can send and receive payments programmatically. Banks often wait months until their customers start generating revenue.
This article explains how Numeral facilitates and accelerates this process for both companies and banks. Numeral helps companies scale their payment operations and banks to attract and retain strategic customers.
How banks uniquely serve companies
Banks play a central role in the economy. They finance companies and keep their funds safe. Acting as advisors to companies, they help them grow and thrive. They also act as the gateway to payment networks and schemes. Behind every neo-bank or next-generation payment service provider is a bank partner. No single payment is sent or received without going through a bank.
Although banks may not be as hyped as some fintech companies, they remain the most efficient, reliable, secure, and cost-effective way to send and receive large volumes of payments for companies. This unique advantage comes from dozens of years of operations, robust systems and processes, huge volumes of payments, and significant economies of scale.
The outstanding bank connectivity problem
The state of bank connectivity
When we talk to banks’ account managers, we often hear that their customers’ first request is not financing or lower fees, but better banking applications and APIs.
APIs (for application programming interfaces) are pieces of software that enable two applications to communicate and exchange data with each other. APIs are used by software providers to enable them to consume their services in their own applications. APIs are Lego bricks that can be assembled together to build products and features.
In the context of banks and payments, APIs enable companies to programmatically send, receive, and reconcile payments with their banks within their own systems, as opposed to their banks’ applications.
In 2022, most banks still do not have corporate APIs. They have open banking / PSD2 APIs that are not a good fit for companies with large volumes of payments. When they do have corporate APIs, they are often scattered and incomplete.
Truth be told, banks did not wait for open banking / PSD2 regulations and APIs to open their systems to their corporate customers. Every corporate bank has one or multiple direct connectivity solutions, usually in the form of an EBICS, SFTP, or SWIFTNet file server that a company must connect to upload payment files and download payment status reports and account report files.
How the bank connectivity gap impacts companies
Although robust and scalable, banks’ file server-based direct connectivity solutions have a number of drawbacks.
Steep learning curve – Banks’ direct connectivity solutions can be complex to apprehend for non-experts, especially as documentation can often be lacking, jargon-loaded, or outdated. This results in a steep learning curve for companies’ finance, operations, product, and engineering teams.
Complex approvals – Due to their syntax and length, payment files can be difficult to review and approve. Removing individual payments from a file requires rejecting the entire file and putting all payments on hold until a new file is created.
Inefficient error management – Depending on the setup, a single incorrect payment in a payment file can result in the rejection of the entire payment file. The incorrect payment might not be easy to identify and the rejection error might not be straightforward without a human investigation.
Asynchronous processing – Banks’ direct connectivity solutions are asynchronous by nature. Banks only process payment files periodically. Corresponding file status and payment status reports are not immediately available. As a result, companies are forced to periodically connect to their banks’ servers to check if any new report file is available.
Numeral combines the reliability of banks with the flexibility of a modern API
By connecting banks to our platform, we aim to create win-win-win relationships between companies, banks, and Numeral.
At the core of Numeral are banks and real-time bank integrations. Numeral securely connects to banks using direct connectivity channels (e.g. EBICS, SFTP, messaging queues, or APIs) and exchanges payment instructions, file and payment status reports, and account reports with the bank.
Numeral then abstracts the diversity and complexity of bank protocols and file formats with a single API that is easy and quick to integrate and enables companies to build real-time, custom payment and reconciliation workflows.
How companies benefit from Numeral
After we connect a bank to the Numeral platform, our mutual customers can connect to the bank through the Numeral API.
It saves them the hard work of developing foundational bank integrations and managing bank protocols, authentication and encryption, file generation and parsing, and data reconciliation.
In addition to modernised bank connectivity, our mutual customers can use Numeral's advanced features to scale their payment operations through programmatic payment approvals, reconciliations, and real-time notifications.
As we look at their business and operations and map their payment flows and processes, we can also guide them toward the banks that will best fit and serve their needs.
How banks benefit from Numeral
Banks connected to the Numeral platform are uniquely positioned to acquire and retain strategic customers and accelerate implementation projects through our API-first platform.
Numeral accelerates the API-fication of banks
Numeral develops integrations on top of banks’ existing direct connectivity solutions and exposes them through a single API. We do it at scale and at no cost to the banks. It is our unique expertise and investment to develop the Numeral platform.
Numeral accelerates implementation projects
By abstracting the complexity of bank systems and integrations, Numeral accelerates and reduces the cost of implementation projects. Accelerated implementation projects result in improved customer satisfaction, accelerated time-to-revenue, improved internal resource allocation, and reduced cost of implantation.
Improved customer satisfaction – Numeral improves the satisfaction of our joint customers by making implementation projects more manageable, more predictable, and faster, thanks to our unique knowledge of banks’ offerings and systems, standard API, and best-in-class documentation. With dedicated Bank Partnerships Managers and Implementation Managers, Numeral is a true partner to both companies and banks throughout their implementation projects.
Accelerated time-to-revenue – With Numeral, companies can start sending and receiving payments and generating revenue and deposits faster. They also tend to accelerate the migration from their other bank and non-bank service providers and other systems more quickly. They have greater trust in their bank integration and perceive less operational risk in pushing large volumes of payments sooner rather than later.
Improved internal resource allocation – As implementation projects become more accessible, faster, and more predictable, banks can better allocate their internal resources. They can parallelise projects to reduce the time it takes to launch a project. They can also allocate more time and resources to more complex or high-value projects.
Reduced cost of implementation – Because they mobilise fewer resources for less time, implementation projects also cost less to the banks. Banks can invest in other business areas, such as customer relationships.
Numeral helps banks acquire strategic customers
Numeral supports leading tech companies such as Spendesk and Swile in accelerating and scaling their payment operations.
Today's tech companies are tomorrow's leaders in industries as diverse as financial services, insurance, real estate, temp work, or retail. They build unique products, deliver distinctive user experiences, grow large customer bases, and build defensible market positions. While tech companies can initially look small for banks when compared to incumbents, it is not uncommon for tech companies to grow 2-5x per year, generating a very sizeable and lucrative business for banks after a few years.
Banks supported by Numeral can tap into this new category of companies by enabling them to build a best-in-class payment experience, win them against the competition, and turn them into strategic customers.
Payments are only one element of the global, long-term relationships banks are building with tech companies as they grow their revenue and headcount, expand geographically, acquire companies, and finance their growth – sometimes to an IPO.
Numeral helps banks retain and grow their customers
By working with Numeral, banks enable their teams to focus on accelerating the adoption of new payment products by their customers rather than on technical discussions.
Accelerated adoption of new payment products – As Numeral adds support for new products released by banks, like SEPA instant credit transfers and virtual IBANs, joint customers can access those new products by changing a few lines of code, instead of going through another implementation project. With Numeral, banks can increase the adoption of new products and reduce the time-to-revenue.
Less time spent on ongoing technical updates – Numeral developer team has in-depth knowledge of the bank's connectivity systems. When technical changes are required from the bank or the payment schemes and networks, Numeral implements them without any work from the bank. In the meantime, joint customers can continue to run their payments without interruption through the Numeral API.
Combining a bank's financial services, operational excellence, and advisory role with Numeral's technology and support guarantees that our joint customers remain happy and loyal long after their successful implementation projects.
Get in touch
Are you a business for which payments are a crucial dimension of your product or operations or a bank looking to serve its customers through technology better and accelerate its API-fication? We would love to hear from you.