STANDARDS: ISO 20022
You got the message? ISO 20022 will unite the payments industry behind a single standard, but it’s a big cultural change for banks – so migrate sooner rather than later, say Christian Fraedrich of Deutsche Bank and Edward Ireland from payments provider Bottomline Modernising payments is what everyone wants – banks, fintechs, payment services providers and, not least, customers. The aim is more speed, less friction, stronger security and greater transparency. However, when it comes to cross-border payments, all these have been a particular challenge. But change is on the way, because ISO 20022 means there is now a common language for payments data across
the globe. One industry, one format, with higher-quality payments for all – that’s the promise of the new standard. Christian Fraedrich, who is responsible for cash business architecture at Deutsche Bank, is leading its ISO 20022 project, and he sees the new standard as a key step in the evolution of payments. “We’ve seen many changes over the last couple of years,” says Fraedrich, “such as the SWIFT gpi initiative, which, for the first time, brought real, end-to-end transparency, as well as the ability to trace cross-border payments from initial instruction through to the credit in the beneficiary account. Not only does this provide transparency to the ultimate customers, but it also helps to streamline investigation and exceptions handling.” Other notable improvements over recent years have been pre-validation, ensuring there is no missing or wrong information that prevents a transaction from being processed, as well as instant payment schemes on real-time rails. “Now that ISO 20022 is rolling out,” says Fraedrich,
“banks have one standard for instant, bulk, domestic and cross-border payments. They no longer need to think about what type of payment they are executing, although it’s more important to be sure of the service level agreement associated with each.” Edward Ireland, who heads the ISO 20022 programme at Bottomline, a leading payments technology provider, is fully immersed in the industry migration and says that Bottomline is moving more than 450 customers across to ISO 20222 in the next couple of years. The current focus on meeting the regulatory compliance deadline for ISO 20022 is masking the fact that it’s been around for a long time. “The standard has been with us since 2004,” says Ireland, “what’s new is that it’s about to become the single standard for payments. Moreover, it’s proven. India and China, the two most populous nations in the world, are already using it for domestic payments, and one of Bottomline’s major markets, Switzerland, moved successfully to ISO in 2015. “It has also proved its value in the funds space, in terms of automating business.” So, how does ISO 20022 compare with the SWIFT MT standard, as well as other legacy standards? Ireland says it’s a big advance for payments and goes way beyond what we’re used to.
Carrier service: ISO 20022 wraps up data with the transaction
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Issue 20 | TheFintechMagazine
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