Financial messaging standards are at the center of every economic activity, managing a tremendous global institutional business or executing small retail transactions, therefore, Industry-wide ISO 20022 adoption is slated to accelerate international payments, enhance interoperability with legacy systems, improve compliance screening, and increase STP.
However, the implications and transformations carried out from this standard are massive, so developing a strategy and implementation plan early is needed. Migration to ISO 20022 (MX) for cross-border payments and reporting (CBPR+) marks November 2022 as the starting date with a coexistence period with M.T. messages until November 2025.
Implementing ISO 20022 is well underway in the APAC region. Australia and the Australian Payments Network (the industry’s self-regulatory body) seek to adopt ISO 20022 by 2024. Singapore’s central bank is already LIVE with the global standard.
The Philippines already made the ISO20022 a new reality in July 2021 with the newly upgraded Real-Time Gross Settlement (RTGS) system- known as PhilPass+. Ukraine is also slated to be in the queue to embrace ISO 20022 for its RTGS system.
As European banks were the first banks across the globe to deploy ISO 20022 for a mass payment transaction with the launch of SEPA in 2014, it is evident that over 70 countries have adopted this standard, primarily for real-time payments.
Approximately 200 market infrastructure-driven initiatives are considering adopting the standard, with regulatory deadlines for ISO 20022 migration across significant markets for 2022 (for Europe, the U.K., and Canada). In the U.S., the Federal Reserve Banks and The Clearing House have already implemented the ISO 20022 for the U.S. The other operators of the U.S. payments infrastructures are ready to adopt this standard for the U.S. wires by 2025.
Meet consumer expectations of proper representation of information
End-to-end tracking of messages/transactions for better service
Create a better customer experience and allow banks to offer clients innovative products and services
Automation and 100% STP to reduce operational costs, errors, and omissions
Detect fraud, analyze AML and sanctions issues, and reconcile payments with little to no manual intervention
Regulatory demand for better tracing and transparency
Allows interoperability between cross-border and domestic payments
ISO 20022 migration strategies, rulebooks, and deadlines differ by payment market infrastructure and SWIFT. When migrating from ISO to legacy systems, reference data and remittance information may sometimes get truncated, affecting compliance and transparency. Implementing the new standard will demand efficient technological solutions.
With the clock ticking on ISO 20022 implementation, financial institutions and corporates should venture into a new journey before it’s too late. Different guidelines have been implemented to harmonize ISO 20022 message formats universally, though some regional and national barriers exist among field requirements.
ECS’s enterprise-centric solution, IMS, is designed to support you at any stage of ISO 20022 migration. IMS’ design enables the communication of corporate-to-bank and bank-to-bank to easily adapt to these requirements with minimal need to write hundreds of rules.
