IBS Journal October 2015


‘When a bank has two or three initiatives to deal with, it’s fine to handle that. When those two or three initiatives


grow to 20 or 30, however, it becomes an issue.’ Stephan Lindsay, Swift


His view was that unless there is a ‘holistic approach’, obstacles and challenges will emerge. His colleague Marcus Treacher, head of innovation, global payments and cash management at HSBC, highlighted a similar issue in the case of banks dealing with corporates: ‘How can we find a unified standard and method that we can all agree on for holding and moving the remittance information for corporates?’ It was mentioned in Boston that,


despite the general support that many have for ISO 20022, the feeling was that the standard was not receiving the uptake it deserved. Indeed, many in the financial community have invested significantly in the preceding standards, ISO 15022 and the legacy Swift MT/FIN. Could their reluc- tance to shift budgets and make room for the incoming ISO 20022 be an inhibitor to overall uptake? The older standards won’t deter the


rising tide of innovation. Lindsay believes that countries and institutions should real- ise that ISO 20022 isn’t a passing fad – it’s actually ‘a wave headed towards them’. It isn’t something they can bury their heads in the sand about and hope to avoid. Sav- ings, innovation and future-proofing are just some of the myriad reasons why they should get on board, Lindsay says. For a potent example, he points towards the recent findings of the US Federal Reserve System, which in a 2015 report conclud- ed that adoption of ISO 20022 should be a matter of ‘when, not if’. According to a recent white paper


from Swift, regulatory initiative is by far and away the largest driver behind stand-


ards adoption, well ahead of commercial interests and competition from third par- ties. Within that regulatory share (73 per cent of cases), however, the main impetus is behind protection of consumers and the development of new platforms. If adoption is just a matter of time then


where will it strike hardest next? The Feder- al Reserve System report described Europe as a ‘mature adopter’, alongside ‘emerging adopters’ India, South Africa, Singapore and Japan. ISO 20022 has indeed been helped greatly by the SEPA initiative, which aims to migrate 18 Euro area countries and 10 EU member states to the new standard by October 2016. The markets of Canada, UK, New Zea-


land and Australia are also beginning to move with the times. Australia will be adopting ISO 20022 for its retail payments network in the future, while Canada and the UK are taking further steps to ensuring the standard is easier to deploy. Canada has been receiving much


praise from Swift for its ongoing overhaul of the payments infrastructure and adopt- ing ISO 20022 as a key component of this transformation. The RTGS systems of China and India are


pondering the adoption of the format too. Emerging markets are where ISO 20022 can make a real impact, says Lindsay, as there are no legacy systems or red tape to prevent them from immediately opting for the latest standard. But what of the US market? It’s slow


going, Lindsay admits, due to its multi-fac- eted nature, with many huge and tiny banks making it tough for ISO 20022 to


© IBS Intelligence 2015


gain any impetus. There is hope, however, as large corporates are already using the XML format in the majority of their messag- ing, which will give them a good base to drive for implementing 20022. Some bold predictions were made at Sibos 2013 in Dubai, chief among them that ISO 20022 would be the default tech- nical standard across the globe by 2018. Those predictions, Lindsay admits, were ‘a little over-ambitious’. The enthusiasm should be tempered a little, he says, when considering the progress that ISO 20022 still has to make in multiple sectors. Imple- mentation doesn’t happen overnight, after all. Key targets for the future, he adds, would be the corporate banking world and market infrastructure at large. ISO 20022 isn’t an order or a mandate:


it’s a recommendation, a market-driven scheme of adoption. Lindsay believes that reluctant communities will move over when they’re ready (or when their technology is in need of an upgrade). What the timescale is for that movement, and how long it might take for businesses fond of their FIN MT standards to move across, is unknown. The journey towards making ISO 20022 a global unified standard is still one with multiple peaks and valleys for Swift. Find- ing something that banks, institutes and regions can agree on, large and small, across multiple borders, seems an insurmountable task. With the Canadian Payments Associ- ation and the British-based Payments UK group leading the way for a fresh generation of adopters, perhaps Swift will be able to get everyone singing the same song in the future, even if it isn’t quite in tune yet.


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analysis: swift standards


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