Blockchain, Not APIs, Is Key to Faster Payments, Report Says

Most finance professionals are not using APIs to facilitate faster payments, according to a new report from TD Bank . Even more surprising is that many of them don’t intend to use APIs in the future. Faster payments is a top priority for many FIs, the TD Bank survey found. <span style="display: inline !important; float: none; background-color: #ffffff; color: #333333; cursor: text; font-family: Georgia,'Times New Roman','Bitstream Charter',Times,serif; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; -webkit-text-stroke-width: 0px; white-space: normal; word-spacing: 0px;">About 60% of respondents expect to see the largest amount of growth within faster or real-time processing this year, up 8% from last year. However, they also view the process of adapting and integrating faster payments into their existing systems as a major obstacle. About 37% of respondents admitted the process is a major challenge, compared to 23% last year. Faster payments raises the question of whether fraud detection is keeping up. "If your payments are real-time, your fraud and security have to be real-time too," Mihail Duta, head of product management of payments solutions at Finastra , told Bank Innovation. "There is no two ways about that." The survey found that 44% listed t<span style="display: inline !important; float: none; background-color: #ffffff; color: #333333; cursor: text; font-family: Georgia,'Times New Roman','Bitstream Charter',Times,serif; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; -webkit-text-stroke-width: 0px; white-space: normal; word-spacing: 0px;">he risk of payments fraud/cybersecurity as the top concern, a 14% increase from 2018. When it comes to technology integration, APIs are often a part of that conversation. In fact, Finastra and other core processors like Fiserv , FIS and Jack Henry use APIs for various banking applications, including faster payments. So it's surprising that not only did TD Bank’s survey find that 49% of finance professionals don't use APIs, but it also showed that a quarter of FPs say they have no plans of using APIs in the future. Fifty percent of FPs claim that their organizations currently use or are in the process of integrating open APIs into their companies operations. The survey showed that blockchain could finally find a mainstream application in payment processing. The survey found that 90% of respondents will use blockchain this year in facilitating faster payments. Banks such as HSBC and PNC have already started using the Distributed Ledger Technology in trade finance transactions. Yet TD's survey reveals that the scope of application will expand in 2019, turning blockchain from just a buzzword trend to actual practical use. Also See: HSBC Looks to Blockchain to Solve a Major Pain Point in Trade Finance The area where blockchain is expected to be most useful is in audit trails, as 29% of respondents said their institution plans to apply DLT in this area. Other areas where blockchain applications may be used include speeding payment processes (22%), cross-border money movement (21%) and reducing fraud (18%). Rick Burke, Head of Corporate Products and Services at TD Bank, said in a statement: Blockchain technology has broad implications for the commercial payments space, from speeding up settlements to securing cross-border transactions. Even though much of the industry has a baseline understanding that blockchain can evolve and improve payments, the varied responses indicate that the technology's specific capabilities and implications are still a great unknown for many finance professionals. For the survey, TD Bank polled 406 finance professionals at the <span style="display: inline !important; float: none; background-color: #ffffff; color: #333333; cursor: text; font-family: Georgia,'Times New Roman','Bitstream Charter',Times,serif; font-size: 16px; font-style: normal; font-variant: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; -webkit-text-stroke-width: 0px; white-space: normal; word-spacing: 0px;">2018 Association for Financial Professionals Annual Conference in Chicago held in November last year. Based in Cherry Hill, N.J., TD Bank has a market cap of $102.8 billion. Read the full report here. Join us for Bank Innovation Ignite 2019 on March 11-12 at the Hyatt Olive 8, Seattle. Register here .

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