Many of the world’s most important payment market infrastructures are transforming to meet the needs of automation, integration and real-time services. All of this is underpinned by the migration to a new payments messaging standard – ISO 20022. For banks and corporates, this is more than just another IT project; it signals a major opportunity to improve payments processes and reassess business models. Paula Roels looks at the implications
“Even the best-designed standards only take off if they meet real and immediate needs in the market,” said Stephen Lindsay, Head of SWIFT Standards, back in 2015.1 For ISO 20022, a global standard for payments messaging first created in 2004, take-off has taken 15 years. Now the moment has arrived.
Globalisation and the increasing need for interoperability of payment flows put the need for a global standard on the runway some time ago. Yves Mersch, Member of the Executive Board of the European Central Bank, described the building of financial market infrastructure on individual or national solutions as “anachronistic” in a speech given in Brussels in February 2018.2
Yet it is digitalisation – and with it the need for automation and faster, or even real-time, payments – that has signalled take-off. Different messaging standards are a hindrance to data automation capabilities, with payments often having to be converted at payment gateways – not always leaving all information intact.
In other cases, information has to be truncated when processed by banks that are not capable of handling data-rich formats, and enriched once more after processing. Not only does this mean inefficiency and potentially lost transaction data, but it is also a big impediment to fulfilling anti-money laundering compliance and fraud regulatory reporting – at a time when it is more arduous and more closely scrutinised than ever.
flow magazine is published twice per year and can be read online and delivered to your door in print
Find out more about products and services