Data is the New Oil





Underlined by the transformative potential, ISO20022 is the new messaging standard. Moving from legacy FIN standard to ISO20022 is taking place at a global level, bound to affect all the payment and linked infrastructures.

With a clear potential of Speed, visibility, reduced settlement time, reduction in exception handling, improved reconciliation and reduced FX risk. SWIFT’s ISO20022 migration seems to be hitting the right nodes of a payment journey. 

The migration will be over a proposed period of 4 years, which is in coexistence with MT. During this period, SWIFT will be sharing service to translate between MT and ISO20022. And this migration will include messages all users and services related to PCM messages (MT1,2, and 9). 
The change is surely a positive step for all participants in the payments value chain, but it does bring its own complications. With a humongous list of differences between FIN and ISO,  the shift will require banks to undertake a substantial amount of alignment work and potentially implement some temporary workarounds during the migration period, and also develop long term solutions. 
ISO20022 is the global standard, banks should also consider developing services that will handle the switch between payment channels. Especially the services involving B2C, B2B and C2B will have opportunities to benefit from smoother processes. 

A significant difference between FIN and ISO is the amount of data and flexibility. Hence, a set of guidelines and defined scope need to be introduced to ensure the content of the message is correctly processed and understood by the recipient bank. 

All in all, change is designed to deliver extensive benefits to banks in terms of efficiency, cost and higher STP rates across payments processing, exception handling and enabling almost real-time settlements. All the additional information in an ISO message will also enable uncomplicated tracking. Owing to the ability to include additional and standard payment information, the risk of errors will reduce drastically. 
By now it is clear that the migration is much more than a technical migration. To truly capitalize on ISO20022, banks need to review payment processes in totality and not in silos.  Involve businesses across regions and aim to deliver one solution across regions. Take a step back and take a fresh look at the entire payments processing engine, and establish how to create added value for customers by capturing, storing and managing the additional MX information in new ways.

The global switchover is scheduled to complete in 6 years, by 2025. And it is not just payments business. The message is clear, we are entering into a new age where payments will be payments, irrespective of the size of the message. And banks need to embrace this era.