Analysis and Outlook for API and Embedded Service Strategies in Transaction Banking

Transaction banking service channels are continuing to evolve with the digitalization needs of companies and the transformation of technology. Since the mid-2010s, banks have developed transaction banking services for corporate clients through the application programming interface (API), driven by advances in Open Banking standards (particularly Europe’s PSD2) and API technology. In addition to real-time payment execution, balance inquiry and data linking, “Embedded services” that incorporate seamlessly into non-financial platforms and business workflows have also emerged (see Figure 1).

*4: Enterprise Resource Planning system (ERP), Treasury Management System (TMS)

To begin with, Figure 2 shows examples of how APIs are used in three domains of transaction banking.

*5: Some banks classify this as part of cash management or trade finance

Major global banks are proactively developing and deploying API service models responsive to information exchange partners and value-added service models based on these use cases.

• Client-led interfaces (Direct APIs): Companies embed banking services in their systems through APIs provided by banks. The banking services provided vary but typically include money transfers, balance inquiry and statement returns. This allows companies to make use of necessary banking services without leaving the systems they normally use. Some banks, like Goldman Sachs, even allow clients to open virtual accounts via API.^＊6
• Partner-embedded banking (Embedded): A model in which a bank’s transaction banking services are embedded in ERP systems such as those provided by SAP, TMS such as Kyriba, and third-party platforms operated by Fintech companies.^＊7 As with direct APIs, it allows companies to use the banking services they need through the systems they normally use.
• Infrastructure-as-a-Service/ Banking-as-a-Service (BaaS): A model in which banks provide financial functions as a “backend,” with the partner company holding the customer contact points. In some cases, the partner company may be a bank client or even another financial institution.

*6: As of August 2025
*7: In Japan, access to banking systems through third parties is only permitted for “settlement agents for electronic settlement systems”

How will the use of transaction banking channels shift going forward, across different company sizes and business types? The following section shows the characteristics of channel use per company size as of 2025 and the transition through 2028 (please note that it indicates direction patterns, and that differences will arise based on geography, industry and the individual capabilities of different banks).

Use by large multinationals (Annual Revenue: US$1B or more)
Large multinationals have traditionally used multiple banks. At such companies, there is a strong dependence on Host-to-Host (H2H) and Swift in core operations such as money transfers. APIs are commonly used by them for purposes such as real-time balance inquiry and payment status tracking. E-commerce companies are leading adopters of the use of real-time APIs and of the embedded collection services, due to their high-volume of transactions and demand for speed. Conglomerate companies and manufacturing companies tend to demand more advanced cash pooling, internal fund-transfer and ERP-integrated liquidity management. Digital native companies generally find it easy to adopt APIs.
Our predicted trends for market share by service channel (based on number of transactions) from 2025 through 2028 is shown in Figure 4.

• Web portals will only be used as exceptions, in ad hoc cases, or in markets where integration is not yet feasible.
• H2H will remain mainstream in high-volume batch processing for payments or reporting. However, it is increasingly used in tandem with direct APIs, which offer real-time capabilities and are being adopted for use cases such as payment tracking, reconciliation and balance inquiry.

Use by Medium-sized Companies (Annual Revenue: US$100M to US$1B)
In contrast to large multinationals, medium-sized companies have demands for API-first approach across money transfer, reconciliation and balance visibility, due to leaner IT teams and fewer legacy system constraints. Adoption of embedded solutions is rising, especially via ERP or TMS platforms. Logistics and supply chain companies require real-time visibility to manage their accounts receivable and payable. Medium-sized manufacturers using ERPs are moving toward embedded banking models, particularly for reconciliation and liquidity management functions.
Our predicted trends for market share by service channel (based on number of transactions) from 2025 through 2028 is shown in Figure 5.

• Web portals still play a role, especially for exception handling or smaller subsidiaries.
• H2H will decline as user companies prioritize agility and faster connectivity/ deployment timelines.^＊8
• Indirect APIs will rise often via self-service integration tools. Embedded banking will gain share as more SaaS platforms such as those for accounting and procurement.
• BaaS will support growth-stage companies looking to add financial services into their offerings.

*8:To initiate H2H services with banks, companies often need to complete the process of converting their file formats to the bank formats. The onboarding process may take months from mapping definition to end-to-end test.

Use by SMEs/ Small Companies (Annual Revenue: US$10M to US$100M)
Small and medium-sized enterprises (SMEs) and Small companies predominantly have used bank web portals. The adoption of APIs is mainly indirect, through plug-and-play modules from ERP or SaaS platforms, rather than the direct APIs. Banks offering BaaS target this segment. Direct-to-consumer (D2C) and e-commerce companies have been the fastest adopters of embedded finance and marketplace banking. Long-tail SMEs also often reach via third-party platforms or marketplace integrations.
Our predicted trends for market share by service channel (based on number of transactions) from 2025 through 2028 is shown in Figure 6.

• While web portals will remain widely used, especially for non-automated functions or less tech-mature companies, their share will gradually decline.
• As SMEs increasingly adopt cloud-based platforms, embedded banking is likely to become preferred model.
• BaaS will also help more digital-first service provides offer financial services such as lending and payments within their apps and marketplaces.

Key trends in the use of transaction banking service channels are summarized in Figure 7 below.

Across all API service models, the developer portals, sandbox environments and no-code onboarding would be required. Developer portals and sandbox environments in particular represent the infrastructure as a bare minimum for deploying an API model. Global top banks further seek to differentiate themselves competitively by adding services such as analyzing API call data and providing the results of this data analysis. Banks deploying an API model must also look at the delivery method and the value added. Below are some of the messages we received from people involved at major global banks when we conducted above research.

ABeam Consulting provides comprehensive support in transaction banking, ranging from the formulation of global, regional, and country-level business strategies, to service development, implementation, and data-driven performance enhancement. In addition to extensive experience supporting corporates in cash and treasury management, supply chain management and global and domestic ERP implementation, ABeam Consulting also excels in developing growth strategies across all layers of transaction banking players (banks, ERP/TMS providers, Fintech companies, end-user companies) and supporting their execution. If you are looking for the partner to develop the business plan and/ or to implement the transformation in transaction banking, please feel free to contact us.