Real-Time Everything: Use of APIs and a Vision of the Future with David Miller

Announcer  00:04

Welcome to the Treasury Update Podcast presented by Strategic Treasurer. Your source for interesting treasury news, analysis, and insights in your car, at the gym, or wherever you decide to tune in.

 

Craig Jeffery  00:18

Welcome to the Treasury Update Podcast. I’m Craig Jeffery, your host for today’s episode, I’m here with David Miller from the Hunt Companies. David, welcome to the Treasury Update Podcast.

 

David Miller  00:28

Thank you, Craig, happy to be here.

 

Craig Jeffery  00:30

You know this idea of using APIs a vision for the future, this touches more than just payments. It’s information. And as the title says, everything, I would love to hear you describe your view on this. What’s your wish list for, real time, everything? What do you mean by a real time everything?

 

David Miller  00:50

Yeah. So you know, we’ve lived in in corporate treasury, in a very batched world for as long as pretty much treasury has been around, and now, with the advent of new technologies like APIs, there’s really no reason to ever have to wait for information to flow, whether you’re talking about information or payments or talking from one system to the other system. Using APIs is this very simplistic way to write a set of code for two systems to be able to talk to each other and do it on a literally instantaneous basis. And so, you know, really, in my first exposure to using APIs in corporate treasury was when real time payments started to be created in the industry and go live. I wanted to really take advantage of it, but to do real time payments, you needed these APIs. As we spent several years working on getting this API connection built to get a real time payment processed, my eyes opened and I’m like, why can’t we use this for everything? And you know, for me, it was just, it was an eye opener. We as consumers out there, in the non wholesale world, in our everyday lives, are using APIs. We don’t even know that we’re using APIs. It’s just the way that we do business on our phones and with our computers, we’re doing things instantaneously. We live in an instant gratification world, and I want that in corporate treasury.

 

Craig Jeffery  02:31

Yeah, so I do want to probe into that, because certainly things are going faster, and some things should be instant. I think there’s some skeptics out there about is everything, does everything need to be instant? And so maybe we can go through some of that in some detail, but maybe David, you could go through a little bit about your career history, the role you have at the Hunt Companies, and also give us a little bit information about the Hunt Companies.

 

David Miller  02:58

Yep. So I’ve been in corporate treasury for 25 years now, my career really started at the forefront of the evolution of the internet based treasury business. When I started, we were still using dial up modems. I had a modem on my desk, 14.4 baud modem and fax, and that’s how we were conducting business. I was working with JP Morgan. It was just Chase at the time to help build their first online internet platform outside of just this dial up platform. So an internet based business. And I liked the time at when I started my career, because I helped. I grew up with the technology. I’ve been at Hunt now for 13 and a half years. I was working for another company in New York City that was a mortgage banking and a multi family mortgage banking agency, originator and low income housing tax credit syndicator and asset manager. And I was there for a few years. I was the treasurer. Hunt acquired that company, and at the time of the acquisition, Hunt asked me to become the treasurer of Hunt Companies at the parent level, Hunt Companies is a family owned, diversified holding company of many industries and businesses, really real estate, infrastructure, asset management and other real assets. The majority of our business is US based, but we own a large global infrastructure company that’s run out of out of London. Company was started in 1947 that is still run by a fourth generation Hunt family member as our CEO. I’ve worked in public companies, private companies, small and big, and I’d have to say that Hunt is a really great I love it here. They’re such a great employer. They’re philanthropic. They care about their employees. They care about the industries they’re in, and. And it’s, I find it is a really great place to work. I love I love it here.

 

Craig Jeffery  05:05

That’s an excellent overview. Thanks for for the background on both your career and some more information on companies. You said something about, when you first started, you were connecting to the banks using a 14.4 baud modem. Now is that connecting through the internet, or was that connecting to one of the private networks? Because all the private communication networks started before the public internet was used by banking. Do you remember?

 

David Miller  05:29

Yeah, we were connecting to private networks at Chase at Bank of New York. So we were connecting into their back end using an AS 400 mainframe system, we used to get envelopes in the mail with our credentials every couple months. And we’d have like a list of like codes, and it was a one time use code. We’d have to put it we’d have to log in with our credentials. Once we got in, we had to put this code in, it, would accept it, and then if we had to log back in, we had to use another code. So we had to cross it off every time. And for some reason those, oh, we’d get those envelopes, it was like it looked like carbon paper. You’d have to sign it and mail it back to the bank for them to accept those new sets of codes. It was really a different world back then. And sometimes still today, I feel like I’m still doing stuff, not necessarily on dial up, but we’re doing some things as slow as they were back then, even though things are way better today, sometimes I get a little glimpse of 1999.

 

Craig Jeffery  06:29

Yeah, I kind of get this feeling like, yeah, 1999 or, you know, Martha Stewart like grinding wood up to make a thank you card. And it’s just, it’s nice that things are moving so much faster now. So sorry to all the millennials and the Zoomers who are saying, Why are you talking about really, really old, slow tech, but it’s part of it’s part of the discussion. So So David, as we talk about some of these categories of real time, or having a vision for real time treasury, I want to talk about information payments, and then if that expands to others. So on the information side, what are you thinking about from a speed perspective, from getting information bounces? I mean, some banks post things at night, and so what you get in the morning is certainly current. And then, you know, maybe as things occur, you can get updates on it. But what do you think about from a real time everything for information?

 

David Miller  07:24

You know, on the real time everything like, how did I come up with that, those three words, right? So I think I’ve mentioned to you and to others before. A few years ago, preparing for a session for AFP, and we were talking about real time payments. It was a real time payment session. And then one of the pages we were working on was kind of, what is my view of the future? And I was like, I really want real all my payments to be instant, real time. I want to know success and failures instantaneously. I want to know my balances without having to log into a bank portal. I want to know what the transactions I’m receiving or sending. And I wanted to integrate into my treasury management system on a real time. And then I just started listing, I’m like, Oh, wow, it would be great if we could do have real time. And I just started listing off things. I’m like, You know what? I kind of just want real time everything. Because right now we have to either wait for some batch transmission into our treasury management system, which, by the way, we use Kyriba, by using Kyriba and having this intermediary, this bank agnostic platform that doesn’t care who I’m talking to or what information I’m receiving, right? They’re gathering all this information for me and putting it into one place because I have this already implemented, there’s no reason why I can’t be getting all of this information from all of my counterparties into one system instantaneously. I want to know when money has hit my account or money has left my account, and I want it integrated into one mutual system. I didn’t mention before, but we’re managing about 40 daily cash management banking relationships in the US about 800 active bank accounts without having a TMS right, sitting in the middle. I would not be banking at 40 banks. I would be banking at like three or four. I mean, my business requires me to do 40, but I would probably fight it and keep it to a few. I don’t care how many banks I bank with now, because I have this one system, and I just keep pushing those banks to build these APIs. I don’t even care which area they are building them in right now. My preference is payments, but I think information is becoming even more important than the payments. I want to be able to make decisions, funding decisions, knowing if some money has come in to close on a transaction. Legal is waiting, an asset manager is waiting. I want to know right now without having to log into some other system to find out if money has come in, and I don’t want to wait three hours for my very expensive intraday file to come in on FTP.

 

Craig Jeffery  07:24

Yeah, so instead of is it there is it there is it there, and you have your your FTP going out every 15 minutes. Maybe we should turn that down to every five minutes.

 

David Miller  10:24

And you know that that’s an option, and you’re paying every time, right? You’re paying for each of those transmission times. And then you’re also relying on the bank. How often does the bank update their back end system? Which is what you were talking about. Most of our banks are more of a posting intraday. I have done business with counterparties, third parties, where I’ve sent them money, and their banks, they’re banking at smaller regional banks, and their banks only post overnight where, because they’re relying on another bank, like a credit union, right, they’re relying on someone else to do something and then send a file to them so they can update their systems. So by us giving them a copy of the confirmation or fed reference number, they’re just saying, Oh yeah, it’s there. Like their bank can’t even see it. Their banker, I would never be able to deal with that. It would drive me crazy.

 

Craig Jeffery  11:19

Maybe I could summarize what I’m what I’m hearing and gathering for what you’re saying. So real time, real time, everything for information is whenever it’s ready, it’s now available to you, even if there’s a batch mode or a slow process on the back end. As soon as it’s ready, it’s to you, you know, and that might be in the morning. And then as other transactions happen, you get those via an API. You want to get those via an API. So as soon as it’s ready, real time, in this transitioning world from batch and real time is whenever it’s ready, you’ll have that information.

 

David Miller  11:53

Yeah, and in the system of record that I’m using, right? So it doesn’t have to be Kyriba,it could be any TMS. It could be any system where you’re aggregating this information that you’re using to communicate with outside people, but you really need one system of record that’s responsible for the gathering of all that information on this real time basis.

 

Craig Jeffery  12:16

Excellent. So, so now, from information over to payments and value transfer. There’s quite a few new payment rails. Some are hype, some are new payment types that are a little bit faster, that ride on old rails. So what’s what’s going on in the payment world? And do you see it working? Is it more in a developmental stage? Your thoughts?

 

David Miller  12:37

Yeah, you know, real The Clearing House with Real-Time Payments, really was the first wholesale, commercial treasury wholesale platform that banks and practitioners were using.  As consumers, we’ve been using Zelle and Venmo for a long time and other instant peer to peer payment platforms, but in the corporate treasury world, RTP was really the first to the market, and the banks had to go out and say, I’m going to enroll to accept these payments, I’m going to go live, to be allow my clients to originate them. Right? So it was a two step process. I think that they started out slow because you had to go through this adoption process, and it was brand new, right? And anytime you’re moving money, it’s super sensitive. You don’t want to mess that up. That is not something that where you want to make an error. And it was slow. And, you know, the Fed kept talking about FedNow for years and years and years. You know, my opinion was always that people were gonna wait that the banks that were gonna not adopting the origination of real time payments, they were gonna wait for FedNow to go live, so that they could adopt a one, one solution. So especially not the larger banks, so smaller banks that rely on third party vendors. I want to go to FIS or Fiserv and say, I want RTP and FedNow now.  I want them both. Now I want to. I want one implementation, or I want to. I want to go to a vendor and I want to buy a solution that has integrated into my back end system, and so I’m not having to implement something every time a new payment method comes out, I just want one platform. And I don’t think that people were really asking for RTP when RTP started, right? It’s like, if you build it, they will come.

 

Craig Jeffery  14:33

There are certainly some use cases that faster would be better, but not everything needs, needed instant, right?

 

David Miller  14:40

Right.  Same day. ACH, the use case really around same day ACH, was my payroll file failed, and I got to pay people. You know, someone needs a cash advance. I got to get money into their bank account. There are use cases for same day ACH, but again, you’re stuck in this batch world. I had asked at a panel that I was hosting with someone from NACHA, The Clearing House, and the Fed, and I said, you know, we talked about the comparisons between, like, oh, so NACHA, what are you gonna do, right? So you’re still on this, like, batching process. Like, are you gonna add more windows? Are you, you know, are you gonna increase your limits? Like, where, you know, it was an interesting conversation to have all three of those industries or businesses all on on one stage. You know, they are competing products, right? They’re competing businesses. They all kind of have their use cases. And depending on how your systems are implemented and your banks are integrating, you might be using one or the other or all of them.

 

Craig Jeffery  15:37

Yeah, we tend to add new payment types, new payment rails, we tend not to delete old ones, except after a really, really long time.

 

David Miller  15:47

Think about how these banks have grown over hundreds of years, right? And the systems and the number of mergers they’ve gone through, and the number of different like DDA systems, someone like Bank of America or JP Morgan are are running in their back end, and it takes them a really, really long time to make change. The big, you know, 10 banks long hard to make change to their systems, because they are running so many platforms, and they’re so integrated across the business into other platforms, and it’s hard, it’s hard for them to change, and that’s why they’re just slower to move. But at the same time, the big banks are the banks that have the budget to go and help The Clearing House and the Fed really fund these new initiatives, or to for someone to build their own new initiative for the industry. But at the same time, they’re very, very slow to move because of their constraints on the back end.

 

Craig Jeffery  16:43

So David, we talked about information and payments, real time everything, at least in those two categories. Are there other categories that you would think of for real time?

 

David Miller  16:54

Well, we also are doing real time money market fund purchases and redemption, so we already have that in place, and I don’t know how many other people are actually using that on a real time basis. So we’ll buy a fund, sell a fund, fully integrated with an API into our treasury management system. We integrate with our ERPs. We don’t have APIs there right now. We are sending information bilaterally, all day long, back and forth through an FTP. Why?  The APIs will be there. They’re just not there now.

 

Craig Jeffery  17:24

I mean, that’s really interesting, because most of what we talked about with information and payments was between a system that’s used and, let’s say, the banking environment that you’re also talking about connecting to various backend systems which may be installed or maybe other software as a service or cloud native solutions, and those connections are oftentimes batched. And so how do you move to streaming or this, this real time.  As things happen, the internal systems are updating each other, the data, the transactions, the ERP, so you’re really, appreciate you really expanding the everything to include everything you know in your company as well.

 

David Miller  18:07

We’ve been talking about EBAM, right, as an as an industry, for 25 years, and really there is no like solid EBAM and using an API, if a bank on their bank account management platform builds APIs like, we literally can have true electronic bank account management communications back and forth.  Like, I’m still, yeah, I’m using DocuSign now, but the fact that we’re still filling out signature cards and account opening paperwork like there’s no reason to be doing that. It should all be done through APIs and authenticated messaging from my system to their system.

 

Craig Jeffery  18:48

Yeah, that’s that’s an interesting example, because it was most of the back end systems didn’t exist at companies. And we’re like, yeah, we want to be able to set up accounts. It’s like, okay. And the banks are like, well, send us your information digitally.  Like digitally?  We have it in paper files, and we can’t integrate.  You know, Swift GPI, as an example is, you know, a payment platform. Swift runs that.  And it used to be this whole missing, missing information, great delay. You send the payment. It’s like, well, I the other party hasn’t received it. You know, you go to your bank, well, we sent it, we don’t know all the steps that it went to. And then you, after five days, you say, we got to research it. And so you send a research chaser after it. And what Swift GPI does is it’s because you can keep status of the payment now every, all of a sudden, the slow parts of the process the non real time parts get exposed. It’s like, oh, it’s been here for 10 hours or a day. Okay. People are thinking, this should be done in, you know, minutes, 10s of minutes, seconds, 10s of minutes, you know, less than an hour or so. And that’s exposing it, because everything’s moving towards this real time.

 

David Miller  20:00

I get so many inquiries into our team of, oh, they didn’t receive their ACH, like, Can you, can you confirm that it was sent? We had a trace number. We’re sending money to, like, some small garbage vendor, right? This garbage, you know, like the garbage service, they don’t know what a trace number is, right? They go to their local bank, they’re like, I got this trace number, you know? Like, what does that mean? And someone’s got to figure out what a trace ID is. Fed wires, they’re good, right? They’re tried and true. Been around forever. Get a Fed reference number. Everyone just assumes it’s done. You get a Fed ref, process over, until that wire comes back, because the account was closed, unable to apply, couldn’t locate, you know, it could, could be in an hour, could be three days from now, you don’t know. And you know, I’ve we’ve closed on a transaction, and we’ve got the confirmation, it’s over, and that’s not the case.  And now, by using real time payments that literally the second we hit approve, within one millisecond, it’s either successfully completed, and I can say with certainty that it’s in the bank account I send it to, or I could say with certainty the payment failed in less than a second. And it’s just so powerful to us, especially as a real estate company and moving lots of money around every day, to know that my payment has been successfully completed on an instantaneous basis. And I can look someone in the eye and be like, I know for sure the money is in their account. I can’t do that with a Fed wire. I could say I got a Fed reference number. I think it’s applied, I don’t know, but we all that’s what we all rely on, right? A fed ref. There’s some great pros around these instant payments, and there’s a couple of cons I always get when I speak about this is faster payments, faster fraud, you know, like had, you know, you’re just sending money to fraudsters quicker. And you know, I always say to that is that it’s all about the controls. It doesn’t matter how you’re sending money. You’ve got to have solid controls around your payment workflow. Literally, doesn’t matter whether it’s a check, an ACH, Fed wire, a real time payment, FedNow, it doesn’t matter, just good controls. So yeah, if someone has infiltrated one of our systems and our controls have failed and I got a bad account number and I send the money to someone, I’m gonna have sent them the money to this wrong fraudsters account as a Fedwire or a real time payment like it doesn’t if I’m sending the money because I’ve already gone through my steps. Now hopefully my controls are strong enough that I will have prevented that, because we have a lot of controls in place.  In my career, my number one fear has always been losing money to fraud. It’s what keeps me up at night and I try to keep our controls really tight.  So I don’t think sending money on an instant basis creates more fraud. One of the other cons that I see around real time payments is the million dollar threshold. Right? We were at 100 we were at 25,000 that million really needs to go up to get more adoption. The jump from 100 to a million was really a substantial increase, but I think that the industry should bring that number up either eliminate the cap and allow banks to risk rate their clients, right? They know Hunt is very sophisticated with strong controls. All right, we’re going to let them originate outgoing payments for $5 million just like on ACH. We have ACH limits on dollar. They cap us internally. They credit. It’s a credit product, right? They’re saying, All right, well, on these accounts, you have approved credit exposure of a million dollars and a total for the day of ten million I think that’s where we should go with instant payments as well, and that’s how you’ll start getting more adoption. Back to what I said about people waiting for FedNow I have seen the number of banks that are participating with RTP substantially increase when FedNow went live. So as people are using FedNow, they’re also allowing either to originate or at a minimum, accept RTP.

 

Craig Jeffery  24:36

When you talked about faster fraud, and you really have the controls. I think the other, the other example that comes up is we don’t want to pay people early. Well, I mean, certainly there are use cases where you want to pay as quickly as you can, but these real time, real time payments, for example, allow you to pay quickly when it’s due. You don’t have to say, Oh, I’m going to send it seven days early. You pay it once you and it gets there quickly. There’s not this latency issue of, oh, it takes six hours to traverse the payment system, or six days it gets to where it needs to go. And that saves, you know, quite a bit of time and reconciliation and agita between you and your your partner. So, yeah, some really good points there, David.

 

David Miller  25:20

It’s certainly there’s, you know, there was one other thing that I forgot to talk about, is that with these products, we’re now in a 24/7 world. 365 whether or not the banks are posting things, 365 days a year, 24/7 I have the ability to originate it. And I know it has gone through. Someone might not see it on their end, but you’re always racing the Fed window. And yeah, they they increase it an hour. I love that our wire windows have have gotten longer, but the fact that I don’t have to worry about a cut off and missing, our window on a closing or some transaction because, you know, legal hadn’t signed off on something yet. And now it’s, you know, a minute past the window. Oh, can’t close today. Oh, we got to repay for all our papers and transaction didn’t close. And you know, now we know that if it’s under a million dollars, and I got to send money out, and I could even said five one was $5 million I can send five $1 million and no one out. But that’s also a challenge to the you know, having this 24/7 to make Fed wires the that went processing window longer, too.

 

Craig Jeffery  26:35

Excellent. You’re quite busy. I know you’re on the board of a particular organization that has an event in September. Can you, can you give a little bit of an explanation about what’s going on and where, where our listeners can find more information?

 

David Miller  26:50

Yep. So I’m on the board of the Treasury Management Association in New York, tmany.org, I’ve been on the board for a long time, past president, vice president. I’m currently the conference chair, co conference chair with Tim Hessler from NYU. We’ve run this conference TMANY for 40 I think it’s the 42nd year. This year, you’ve attended and presented and done giveaways for a long time, and we appreciate your support there. But this year, the 2024 New York Cash Exchange is September 10 and 11th at the Jacob Javits Center, which is the same venue that we hosted it at this past year. We’re doing a two day conference this year. We did a lot of feedback and surveys and people we used to we forever have done two and a half days. So we eliminated the half a day, and really are focused on, you know, treasury, best practices, risk management, I think we have 20 something sessions, a couple keynote speakers. So it’s, I think, and it’s, I think it’s 12 CTP credits you’ll be eligible for. It’s a great conference. If you’ve never been. It is like a small AFP. If you’ve been to the AFP national conference, we have five, 600 people. It’s intimate. You don’t get lost amongst five, 6000 people. I became involved in the board because of the New YorkCash Exchange back in the day, and I love the event so much. And I kept saying, I want to do more. I want to help. I really appreciate what you guys are doing for the industry. And then years later, I was the president, and it’s a good organization. It’s a great conference. I love it. I have a special promo code that I have for the listeners of this podcast. You can go to tmany.org you can find information on the cash exchange, and you can also find TMANYon LinkedIn as well, but if you message me on LinkedIn, I will send you a code for a discount off admission.

 

Craig Jeffery  28:46

Yeah. So it’s a great it’s a great event. Looking for I look forward to that every year in the show notes, we’ll put information about what David just said for being able to connect and get the discount link. David, as we head towards the end of our discussion today, on a real time everything, or a vision for real time everything, I wanted to hear your your recommendations or advice that you would have, I ask a few questions at the beginning, answer whichever ones you like, or answer them in omnibus. But you know, how do you think about real time everything? You know, I think you’ve covered most of that, but there might be some other thoughts there. What about external connections and internal flows? We talked about that API and streaming internally, right? If we’re getting to real time everything, and then what practical things need to be done? So I’ve thrown out a bunch of things there. Pick what you think would be most salient for the audience to hear.

 

David Miller  29:41

You know, you really need a central platform to really start working, to get to like a real time world, whether it’s a TMS like Kyriba or your ERP or a homegrown treasury management system, you really that’s that’s got to be your first step and have some sort of aggregation platform. You got to talk to your banks and your vendors and tell them you want this. When I speak at conferences about this, I end the session with, if you are a practitioner in this room, please turn to the bankers in the room and the vendors in this room, say, can you build me more APIs, please. And if to the vendors and the bankers in the room. We want APIs. We want more. We don’t want to be building more, implementing more FTP connections. We are constantly doing business with new banks, and it pains me that I am still today implementing new FTP connections.  So everyone who’s listening, if you are not using APIs, trust me, it will make all of our lives easier. It will make us more efficient. It will make us better treasurers. It will make your companies happier, because you will be doing things just better. You will be doing things better. It will be an improved way of doing things if you are doing using APIs, because you can answer, you work for the CFO or the chief accounting officer, whomever, is asking you for information, you will be able to provide them information practically instantaneously and accurately. So ask for APIs. And again, it’s for the technology and the bankers in the room. Build more. We want them.

 

Craig Jeffery  31:30

Build more. We want them. This is the vision for real time everything. David, thanks so much for your comments and your thoughts on this subject. I really appreciate it.

 

David Miller  31:39

Enjoyed our conversations today, Craig.  Thank you, and come see me at the New York Cash Exchange.

 

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