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Empowering treasuries through API integration: lessons from DSV

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DSV, a global transport and logistics company, has been at the forefront of moving goods across international borders for decades. With operations spanning multiple continents, handling diverse client needs, the firm faces a unique set of challenges.

Speaking at the 2023 EuroFinance International Treasury Management, Theis Stig Jensen, VP of group treasury at DSV shared his insights on the integration of Application Programming Interfaces (APIs) in treasury operations. 

The journey to API adoption

In the fast-paced realm of financial operations, DSV embarked on a transformative journey to adopt APIs, with the goal of revolutionising its treasury functions. The driving force behind this strategic move was the necessity for real-time transaction data, essential in DSV’s low-margin industry. Integrating APIs was more than just a technological upgrade; it represented a crucial alignment with the rapidly evolving digital financial landscape. Recognizing the importance of efficiency gains in their sector, the treasury team at DSV leveraged the capabilities of APIs for streamlined treasury operations and enhanced customer experiences. 

The integration process, led by Theis Stig Jensen and his treasury team, involved navigating through the complexities of adapting their existing system to incorporate API technology. This task demanded a blend of technical expertise and strategic foresight, crucial for automating transaction reconciliation processes and reducing manual intervention. Collaborative efforts between DSV’s treasury, IT department, and banking partners were essential for seamless technological integration and effective financial data management.

“In the world of treasury management, embracing APIs is not just about technology; it’s about unlocking efficiency and connectivity across financial ecosystems…The real power of treasury lies in its ability to seamlessly integrate with the digital landscape, and APIs are the conduits of that integration” Jensen told delegates at the conference. 

However, the journey was marked by several challenges and learning opportunities. Initially, APIs were perceived as straightforward solutions, but the reality of their integration required a nuanced and tailored approach. One of the key challenges was aligning the optimistic presentations from banks with the practical intricacies of API deployment, particularly within their current system. The variance in data received from different banking systems across countries added another layer of complexity, calling for a customised approach for data standardisation and reconciliation.

Understanding the banking processes emerged as a crucial factor in this technological shift. This knowledge was pivotal for the team to adapt their approach for effective data reconciliation and achieving real-time visibility of transactions. The thorough assessment of banking partners’ readiness and compatibility with the new technology was a significant learning curve and a crucial component of the project’s success.

Strategic partnerships and implementation

In the implementation of APIs, the selection of banking partners and the decision to partner with a fintech firm were critical components. Jensen understood that the success of the project depended heavily on these strategic collaborations.

The treasury team sought banks that were not only ready to embrace API technology but also aligned with the company’s operational requirements and objectives. This meticulous selection process ensured that the APIs would deliver relevant and precise data, vital for making real-time financial decisions and enhancing operational efficiency.

Equally important was the treasury team’s partnership with a fintech company, chosen for its compatibility with their current system and its reputation for agility and innovation. This partnership provided the treasury team with necessary technical support and insights, enabling an effective interface for processing and utilising the data from the APIs. The fintech’s expertise in navigating the intricacies of modern financial technologies facilitated a smoother and more efficient integration process, proving to be a strategic move in the successful implementation of APIs.

The impact on treasury operations

One of the primary benefits observed was the acceleration of data flow. With APIs, the treasury department could access real-time banking information, a stark contrast to the previous batch processing systems. This immediate access to financial data enhanced the treasury’s ability to make timely and informed decisions, a critical factor in the fast-paced logistics industry where DSV operates.

The adoption of APIs also led to improvements in the reconciliation process. The treasury team found that APIs provided more detailed transaction data compared to traditional bank statements. This enriched data enabled quicker and more accurate reconciliation of incoming payments, reducing the manual effort and time previously required for this task.

Meanwhile, the treasury team also registered a significant reduction in credit risk exposure after incorporating the technology. APIs facilitated quicker clearance of payments, allowing the company to release goods from warehouses sooner. This not only improved customer satisfaction but also optimised inventory management.

“In the treasury of tomorrow, APIs will be the key that unlocks the door to agile financial operations, enabling rapid adaptation to the evolving needs of the business environment” Jensen further explained. 

Furthermore, the real-time data provided by APIs allowed for more efficient management of cash positions and forecasts, leading to better liquidity management. This efficiency gain was not just a matter of speed but also accuracy, as the quality of financial data improved. Looking ahead, Jensen sees further potential in API applications, such as bank account validation, to prevent fraud and streamline master data management.