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Ed Ireland Senior Market Development Manager at . bottom lineis a cloud-based solution that enables organizations to centrally manage and automate payment execution and reporting across the enterprise.talk Fintech TimesIn , he debunks the myths surrounding ISO 20022 and explores why we believe this technology is the future.
The bottom line plays an important role in your financial message. Provides outsourcing services to his 350+ clients worldwide. I work on the product team and have her PnL responsibility for platform services. Additionally, by planning an ISO 20022 program and ensuring that our clients have the market infrastructure ready, we will begin earlier this year and continue to move to ISO 20022 next year and beyond.
ISO 20022 is the new global standard for payment messaging. Create a common language and model for payments data around the world. This provides higher quality payment information than other standards and adapts to new needs and approaches.
many market infrastructures including Quickwill migrate its messages to ISO 20022 over the next two years. Clearing House Automated Payment System (CHAPS) and TARGET2 Euro Payments (T2) are successfully delivered. In addition, SWIFT has adopted the Cross-Border Payment Reporting (CBPR+) Working Group rulebook, with a coexistence phase for MT/MX messages by 2025.
Within five years, approximately 80% of high-value global payments are expected to be monetary, with 90% migrating to ISO 20022.
The challenges are multiple and grow over time. Until ISO 20022 native, you will need to manage translations, enhancements, and coexistence of standards with counterparties and across back-office systems. Managing the data required by ISO 20022 with legacy standards becomes increasingly difficult.
Benefits of having a unified payment language include global interoperability across all operators and rich remittance data. This includes up to 140 characters of unstructured or structured reference data.
A unified payment language also improves data quality with enhanced structure and granularity, reducing manual intervention and improving decision-making. Uniform, reusable terminology and message components are another benefit. These can be easily adjusted and amended to process payments globally with all other banks and countries.
Harmonization between payment systems and payment types is also possible, with over 70 countries already adopting ISO 20022. A unified payment language also lays the foundation for innovative service offerings and products, and is simplified by XML, reducing overall operating costs. Development, maintenance and support.
Getting started with ISO 20022 is not the end of your journey. As participants familiarize themselves with the standards, they are encouraged to introduce more structured information. This is where the real benefits of adopting ISO 20022 begin.
Businesses can leverage ISO 20022 and APIs as a standard for data exchange in payments within applicable regulatory and compliance regimes. Additionally, businesses can achieve greater automation, enhanced STP, and redesigned processes. All of these are meant to reduce friction.
It also reduces costs by dismantling outdated legacy applications, increases the effectiveness of fraud detection and prevention measures, and improves insight into the business intent of customer payments as the foundation for innovative value-added services. You can also Businesses can also develop new integrated consumer-oriented services and products to meet the growing demand for speed, transparency and detailed tracking information.
A simple connectivity upgrade can be completed in a few months at a relatively low cost. However, it is the wider impact of ISO 20022 that needs to be considered. Payment, screening, reconciliation, and monitoring systems must be able to support ISO 20022 and additional data elements, as well as increased structure and granularity. This will require upgrades, development, and project work to improve static data. This work varies greatly between institutions.
Data will be broader and more structured. This allows more accurate and relevant information to be passed in transactions. Help banks ensure better compliance through more comprehensive and accurate oversight.
Technically, there is more data to hold, process and exchange. As a standard, it is more flexible and allows more data to be exchanged. Market practices are key to ensuring consistency in expected trading in each market. With global coordination through groups such as HVCS and CBPR.
Most institutions will be technically ready for ISO 20022 in 2023. However, many institutions still operate with legacy standards. There will then be a multi-year coexistence period as markets and participants transition to using ISO 20022. It will spread slowly at first, and then we may see a snowball effect as major markets and players start sending and demanding it. Get ISO 20022.
Getting started with technology isn’t the end of your journey. As participants familiarize themselves with the standards, they are encouraged to introduce more structured information. This is where the real benefits of adopting ISO 20022 begin.
Francis Bignell
