SWIFT 2021 – Preparing for impact
In response to increasing industry pressure, SWIFT has decided to move the scheduled 2020 release for messaging changes to 2021. This buys retail banks some much needed time to get their systems up to standard in order to benefit from the changes and enhance customer service. What can banks expect to see moving forward into 2021, and how can they prepare themselves?
The “SWIFT 2021” initiative will have a wide-ranging impact on the financial community. Designed to improve transparency and protect against money laundering, this package of updates removes free-format data from payment messages so senders and beneficiaries can be clearly identified and screened against lists of sanctioned entities.
Currently, in fields 50 and 59 of the MT103 payment message, it is possible to use repeat characters that may pass checks but obscure the sender or beneficiary’s identity. The new standard, which becomes mandatory in November 2021 will require these fields to include a name, address and country code, and details will not be allowed to be repeated on different lines. Payment messages that fail to comply will not get through. Moreover, all banks which use the SWIFT network to send universal confirmations and are not compliant from June 2021 onwards will be published for competitors and customers alike to see. With reputation at stake, banks are encouraged to be compliant to boost their position in the market and stay ahead of the competition.
SWIFT 2020 also mandates a centrally tracked confirmation within two days of funds being credited or payment rejected. As with the MT103 field changes, this is intended to promote greater transparency and efficiency throughout the global payments system.
Change for good
The SWIFT releases set for 2021 are designed to improve the payments experience for customers and for banks. By reducing interoperability issues, increasing speed of confirmations and providing richer information and enhanced transparency, the new releases will transform the user experience as a whole. By enhancing the experience across the end-to-end payment processing chain, financial institutions should feel a positive and beneficial change.
As SWIFT says, “doing nothing is not an option”. All banks have to be ready for this change. The sooner banks decide to act, the better prepared they will be and the sooner they will be able to benefit from the update.