This summary is inspired by the article originally written by Joe Higginson and published in the Payments Journal.
The stage is finally set for ISO 20022 to take hold amongst the world’s financial institutions. More than 15 years after the concept was originally published, SWIFT is finally adopting the new payment standard.
But ISO 20022 is not just about updating old messaging. The forced change opens a wide opportunity for institutions to look at the way they approach their migration, technology choices, and payment processes.
Although ‘send and receive’ is valuable, it is only the beginning when it comes to the intersection of payments and other systems within banks. If ISO 20022 is adapted at the payments end, data still needs to be translated from the other downstream systems used in a bank, such as treasury or home loan origination. “It’s a bit like upgrading one part of the bank to a music streaming service and expecting it to be compatible with the rest of the business that still listens on CDs,” writes Joe Higginson, Chief Commercial Officer at Identitii.
In a recent article published in the Payments Journal, Joe shared his top four considerations for organisations on their ISO 20022 journey.
ISO 20022 as a way of life
ISO 20022 is often thought of as a problem that needs to be solved. Rather than treating it as a one off project, this is an opportunity to instead make ISO 20022 migration a catalyst for fixing broader issues within organisations.
Interoperable payment systems
The new ISO 20022 standard will have an important impact on interoperability amongst payment systems and the use of Central Bank Digital Currencies (CBDC).
With banking becoming more globalised and access to more dynamic payment rails increasing, institutions will be in a far better position when they adopt the ISO 20022 standard.
Additionally, the ISO migration provides more opportunities for innovation. At present, financial institutions typically rely on specialists to mine value from data that is disparate and requires intensive aggregation before it can even be analysed—a time consuming and costly process.
Instead, if compliance, operations, and sales teams have easy access to structured payments data, it would open up wide opportunities to extract higher value from the balance sheet and improve liquidity movement.
Finding fraud in real-time
The adoption of ISO 20022 also improves transparency and increases the ability for institutions to spot fraud in real time. The migration means data will be richer and more structured—removing the need to look across different systems and formats at once—and therefore making it easier to spot patterns of financial crime.
In the past financial institutions have relied, to some extent, on complexity to deter fraud but that same reliance will not be feasible in the fast-paced high-speed payments world of the future.
ISO 20022 and a focus on the future
“All these opportunities to deliver better customer service, reduce fraud and increase profits naturally require investment. But the potential returns are substantial. Instead of treating ISO 20022 as a one-off fix, it becomes a launch pad for data transformation and innovation across the bank and its partner ecosystem. This will require additional investment and resources, but the returns are potentially enormous,” writes Joe.
Identitii’s compliance reporting platform helps you to automate AML/CTF transactions in a fast, safe, and secure way. To learn more about how our platform can assist with your ISO 20022 migration, click here.