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The concept of generating quantifiable revenue using payment data to make measurable business performance improvements and informed decisions within the financial industry is not new. 


However, there has been an explosion of interest in recent months as margin pressure and growing customer expectations, alongside ISO 20022 migration and the expansion of real-time payments infrastructure, combine to create new revenue opportunities. With many banks already embarking on payment data monetization strategies, few can afford to be left behind.

 

With many banks already embarking on payment data monetization strategies, few can afford to be left behind.


Financial Institutions succeeding in the digital age are often ones that have improved their data integration – going beyond simply collecting and mining data. 


Use cases are moving rapidly from a focus on tactical compliance and operational use cases towards enabling a range of new client-facing initiatives. Monetization, whether direct or indirect, is becoming an increasingly important driver of these activities. 


Enterprises are integrating data from various, isolated silos to harness the data into business intelligence that can drive vital decision making and improve internal processes.


An ISO 20022 Data Fabric


The ISO 20022 message standard delivers benefits to all users throughout the payments chain. In High-Value Payment Systems (HVPS) the benefits are realised by the financial institutions and their corporate clients who send and receive these messages. Over time, customers are expected to benefit from data-rich payments, more efficient and lower-cost payment processing, and enhanced customer services such as improved remittance services. 


A comprehensive end-to-end implementation by all participants is ultimately essential if all stakeholders are to benefit from the migration. This also means that companies need to act to address not only their processes and the format migration itself but also the accompanying changes regarding the structuring and generation of their data.


This implies multiple systems within a financial institution and a corporate will have to be upgraded to consume ISO 20022 data. This creates a direct dent in the budget as these updates will be in line with the global ISO 20022 plans.









Nucleus, listed by Swift for ISO 20022 CBPR+ readiness enables banks to migrate to ISO 20022 standard and store rich information without forcing large-scale change and disruption. It is specifically designed to manage large and complex data sets in the cloud, integrating and enriching diverse data sources along with the payment processes.        

A highly responsive and reliable data platform, flexible across multiple cloud providers and delivering both the compliance that regulators demand along with the agility to enable financial institutions to build new services and data models. 



To leverage value from the large-scale external changes being implemented by SWIFT and other Market Infrastructures, financial institutions need to be able to


- Internalize the ISO 20022 data language and definitions.


- Update systems to be able to receive data as per ISO 20022 definitions.


- Capture payment metadata from payment messages.


- Extend rich contextual payment data to existing organisational systems that are not ISO 20022 native.

Without the right tools and data platform, it can be exceedingly expensive and complex.


Nucleus ISO 20022 Data Fabric is the future of a Data-centric and Low-Cost approach to organizational message enrichment.


Nucleus is designed to store the data in ISO 20022 native format, enabling financial institutions and corporates to not only create paths for the new standard but also open opportunities for organizations to assess how to unlock the value of new, higher-quality payments data. This provides opportunities for more transparency, automation and new services — all fueled by the richer intelligence encased in the ISO 20022 format. 


Here are a few ISO 20022 use cases: 


- Completing Data Transformation for ISO 20022 Compatibility


Data transformation can be challenging, especially when handling diverse data formats. Legacy systems often struggle with ISO 20022 data sets, leading to spatial constraints and necessitating additional data storage. In some cases, this misalignment results in data loss and truncation.


Truncating payment messages and losing ISO 20022 data present significant issues, disrupting interoperability and introducing complexities in data exchanges. This can lead to inconsistencies, errors, and inaccuracies in transaction data, impacting financial operations and decision-making. Non-compliance with regulatory mandates may result in legal consequences. Automation initiatives are hindered, processes slow down, manual intervention increases, and operational efficiency diminishes. In extreme cases, it may prevent a bank from participating in a payment scheme. ISO 20022 often includes crucial security-related data, and its loss can compromise security measures, making systems more susceptible to fraud.


In both scenarios, vital information becomes inaccessible to the payment engine, rendering it inadequate for essential processing tasks like AML checks, fraud detection, sanction checks, reconciliations, and matching. Managing and sharing this data with downstream systems becomes more intricate. 


Nucleus was purposefully designed to seamlessly handle ISO 20022 messages. Its data structure aligns with the latest ISO standard, featuring specific configurations for each payment system to ensure the preservation of original data sent and received. This preserved data in ISO 20022 format remains readily available for payment processing and downstream system utilization, including core, KYC/sanctions screening, and reporting systems. The incorporation of additional fields and information by all these systems underscores ISO 20022's comprehensive and impactful role in day-to-day banking. This native approach guarantees the maintenance of data integrity and accessibility throughout the entire payment lifecycle.


- Translation Process and ISO 20022 Integration


In older systems, ISO 20022 fields undergo translation into the engine's proprietary fields, impacting downstream systems, integrations, user interfaces, and users. This complexity requires additional guidance and interpretation for banks to accurately utilize the data.


Building translators/mapping tools within an integration layer between payment systems, payment engines, and the bank's applications becomes a challenging task. The inclusion of these mappers often requires the procurement and installation of additional software, leading to high licensing costs. Banks, leveraging existing middleware for high throughput, also need trained personnel to handle the added complexity, incurring further expenses.


Therefore, the optimal strategy involves adopting a native ISO 20022 canonical format as the fundamental framework for all aspects within the payment engine. Nucleus Payments stores instruction data following ISO 20022 naming conventions and structure, ensuring a minimal memory footprint through efficient data transmission protocols while retaining the original presentation of payments. Nth Exception owns, maintains, and updates the ISO 20022 representation, guaranteeing ongoing compliance with the standard.


This approach streamlines integration efforts and significantly contributes to standardization and simplification within the bank's infrastructure.



- New ISO 20022 Payment Messages and Financial Domains


ISO 20022 not only offers detailed payment messages but also accommodates various message types for purposes such as trade and securities. Worldwide financial systems increasingly adopt these diverse message types, but integrating them into existing systems can be costly and time-consuming. Vendors often neglect support, leaving banks to seek alternative solutions or forgo new message types.


Instant payment messages, such as pain.001.001.03 or pain.013, exemplify this challenge. If the payment engine cannot accept these messages, a separate service is required, exacerbating payment stack complexity and demanding integration with the existing payment system.


Nucleus is purpose-built for all ISO 20022 payment messages across Swift CBPR+, regional HVPS+, and instant payment schemes, including Request to Pay.


- Business Logic Integration


Merely acquiring and storing messages is insufficient for banks; effective business logic is also required. Inconsistencies in support levels for new messages often limit a bank's ability to capitalize fully on enhanced formats. Nucleus addresses this by defining the structure of a message, making it accessible through public APIs, and seamlessly integrating with configurable Instruction Flows. Clients can define and maintain business processing logic and lifecycles, reducing dependency on vendors for building and maintaining these processes.


This integration facilitates sophisticated interactions with messages, introducing novel capabilities for customers within a short time and with minimal effort.


The benefits extend far beyond compliance. While standardization will make payment infrastructure more efficient, better data will deliver notable benefits across the global economy.

 

An Ideal foundational data platform for payments transformation through IBM Watson / Azure Applied AI and AWS Sagemaker services. Federate data to legacy (non-ISO 20022) environments.


Bridge the gap between legacy data platforms and ISO 20022 with the inbuilt translator is designed for FIs to accelerate value extraction from ISO 20022.


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