Is ISO 20022 a go for 2022?
A common language, format and data set for payments has been on the discussion board for quite some time. It was agreed a while ago that in creating such a model the industry would improve the quality of the data across the entire payment business and in essence lower the total cost of ownership for all. There are benefits to us all implementing this standard and meeting the key objectives for our payment community – which will be to bring improved data quality as a foundation of the initiative.
Firstly, an acronym. We cannot have such a global transformation without an acronym. And so we welcome ‘MT2MX’. This is, from a technical standpoint, describing the transformation, the change and evolution that is to be set in place. Transforming seamlessly the timeless “MT” formats into a flexible XML based message is much easier said than done, however the benefits are clear. MT to MX migration creates richer, structured, and meaningful data that enables new client experiences, while improving compliance and efficiency. ISO 20022 is flexible... flexible enough to handle today’s needs and continue as one open standard for payments messaging in the near and farther looming future. Having moved the starting date well into 2022, adopting the standard for cross-border and cash reporting activities should allow ample time for banks and businesses to prepare. Adopting this standard, and commencing the journey earlier rather than later, will allow financial institutions to plan their migration approach whilst either choosing to maintain their current standards or migrate in line with their own priorities and budget.
With change comes opportunity. So, what are the banks waiting for?
The reasons for banks to be already well on their ISO20022 journey are seemingly understood but the work involved in such a wide reaching migration is not being underestimated. Why is it that some banks have still not begun their journey, even in 2021?
Market unknowns, budget constraints, and of course the global COVID outbreak have created uncertainty and, as such, have twisted business plans and priorities to a focus on the short term and immediate revenues rather than perhaps strategic longer-term planning.
Whilst vaccinations are being administered, many banks sit in limbo, looking into the horizon to see how and when the markets will, if ever, return to their previous state. That said, there has been an incredible rise in online transactions – immediate or traditionally paced payments – with consumers spending more and more time using online, digital services, either purchasing goods to be delivered to the doorstep or consuming financial services from their bank and advisors. This is more than a trend, this is a fact. Payment transaction volumes have grown, yet a Mckinsey reports suggests that in the payments sector, global revenues declined by an estimated 22 percent in the first six months of the 2020 compared with the same period in 2019.
There are various solutions. Whether you are looking for a cloud, hosted or on-prem solution, the key is weighing the risks associated with such a transformation and planning the approach that will suit the business both from your customer’s experience and journey and, of course, bringing value to the customer. As-our solution allows for an almost clear differentiation between the emotions associated with “business” logic and the technical handling of the messages task, the experienced Finastra team will provide you with the functionality that secures your business, its revenues and most importantly, your customers.
Discover how Finastra’s ‘ISO native’ solutions can provide out-of-the-box support to ensure a successful ISO 20022 migration. Find out more today.
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