Software has brought markets from around the world closer than ever. A software firm in Tallinn can easily sell to a customer in Brisbane without much friction. Until more recently, it has been the financial process of payment that has offered the most amount of friction, which is surprising to hear for many local businesses.
Money does not move like data. It’s far more regulated and involves a fragmented domestic clearing systems, along with local frameworks and distinct banking protocols. It’s messy, timely and expensive.
For decades, the only solution was often to simply establish a local legal entity so you could open a local bank account and integrate the payment system. It as a country-by-country approach and costs a lot in HR, understanding compliance, and often having unnecssary physical presences around the world. Today, with a unified API, money is beginning to behave a little bit more like data.
The fragmentation problem
In Latin America alone, the landscape is dizzying, with Mexico using SPEI (real-time payments), Brazil has turned to PIX, Colombia has its own banking protocols, while the United States relies on the ACH and Fedwire networks.
Scaling a startup across these markets would have been a nightmare a decade ago. The API specifications for a bank in São Paulo are entirely different from those in Mexico City. The authentication standards, along with the data formats and error codes, share very little in common. The payment infrastructure needed to serve these markets was a huge barrier to entry for smaller startups in their early stages.
One connection, multiple markets
The promise of the unified banking API is simply the decoupling of business logic from banking logic. In other words, by sitting between the enterprise itself and the financial institutions, these providers translate the chaos of local banking into a single, standardized, and very developer-friendly language. Now, the business operations needn’t factor payments as much into their operational decisions.
It’s comparable to how Twilio changed telecommunications. As developers no longer need to negotiate with local carriers to send an SMS in a different country, fintechs no longer need to build direct connections to local banks so that they can move money. Integrate once with a unified API for cross border banking, and that’s that – the provider handles the routing, translation, execution, and everything else to do with the transaction, whether it’s PIX in Brazil or a sluggish US wire transfer.
This “write once, run everywhere” assumption now reduces the engineering overhead required for expansion. Going into new markets is less of a problem – not just in terms of upfront capital, but time.
The new players in town
Prometeo is a prominent company that sits in a profitable niche by focusing on the “borderless” nature of the Americas – a space that is becoming more integrated generally. It brings together the disparate financial systems across the continent and the US into a single access point so that businesses can view balances and centralize treasury without needing dozens of local logins.
Belvo is a competitor in the region and is mostly credited with building the Open Finance rails that allow for deep data access across Latin American financial institutions. Outside the Americas though, Yapily has mirrored this move in Europe to provide an infrastructure layer that connects to thousands of banks for open banking payments and data aggregation. Salt Edge is a very global option as the have access to well over 5,000 financial institutions.
Treasury and data
Payment initiation (so, sending from point A to point B) is often the headline feature with these sorts of platforms, but actually, the data component is just as revolutionary. For a regional CFO, they can now benefit from greater visibility. A traditional setup would have meant understanding the real-time cash position of a company with five different log-ins, various portals, exporting CSV files, and then manually consolidating said spreadsheets. This could be automated in some cases, but it’s quit the undertaking and is prone to breaking.
Unified APIs solve this though by aggregating account information so that a central treasury dashboard can easily query a single API to retrieve balances and transaction histories from accounts in Peru, Chile, Miami… Simultaneously.
This can help prevent trapped liquidity where funds sit idle in one country while perhaps you’re paying interest on a credit line in another. Treasury management becomes more reactive and dynamic where you can optimize working capital in ways that were previously impossible.
The future is most certainly borderless
Unified API are finally bringing maturity to the fintech ecosystem at a time where crypto threatened to offer a solution. The first wave of fintech was all about consumer experience with slick apps and neobanks. The current wave is much more about infrastructure and fixing the B2B plumbing that connects entire economies. International business had already boomed with even the smallest of businesses – but now, even the very idea of a domestic business may begin to fade, particularly with the growth of multi-lateral blocs.
