Ushering in the ISO 20022 era
The migration of ISO 20022 promises to upend payments as we know them. flow looks beyond the upcoming deadlines to explore the long-term vision for the payments standard and the challenges that lie ahead for the industry
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SO 20022 has been many years in the making. First recognised by the International Organisation for Standardisation (ISO) in 2004, it was positioned as the global payment standard of the future – one that was both comprehensive in scope and flexible in nature. However, it would take more than 10
years for momentum to build in its favour. The tipping point came as calls for faster payments grew louder, with demand coming from both retail and corporate banking customers. For banks to keep up with the expectation for near-instant payments around the clock, a next- generation market infrastructure would be needed – one that could offer seamless and quicker payments processing in support of digital business models. These considerations led SWIFT, the global payments organisation, and the world’s major central banks to agree on
a common migration to ISO 20022. Fast forward to today, and the industry is well into its ISO 20022 journey – with the clock counting down to several significant milestones. By November 2022, a number of key infrastructures, including the Eurosystem, EBA Clearing and SWIFT, will have completed the first major milestone in the migration to ISO 20022 (see Figure 1).
The faster the
industry adopts the enhanced data... the more accurate AFC models will be.
Christopher Gardner, Programme Manager at Deutsche Bank
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Multiple benefits The decision to migrate to ISO 20022 is a game-changer in payments processing. It promises greater interoperability between various settlement networks and will lead to simplified global business communication. As the standard is not bound to any existing technologies or processes, it will also be future-proof. Moreover, compared with other formats, ISO 20022 introduces richer and more structured data components. This, in turn, increases the transparency of payments and supports financial institutions with their task of guaranteeing secure, straight- through payments processing and conforming to compliance regulations. For banks, this presents a host of opportunities, from offering enhanced customer services to completely re- evaluating their business models. In particular, the richer data will have a significant impact on anti-financial crime (AFC) monitoring and surveillance. “The faster the industry adopts the enhanced data in addition to the schemes, the more accurate AFC models will be,” says Christopher Gardner, Programme
Photography: Alamy
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