ISO 20022: MANAGING CHANGE
thinking Despite years in the making, the migration of tens of thousands of participants in the world’s payments networks to ISO 20022 is proving infinitely complex. A recent discussion panel, mounted by Intercope, with Andrew Muir, Daragh Kirby and Olaf Grossler, explored some of the consequences and offered at least one solution Payment messaging standard ISO 20022 isn’t new; but its adoption, simultaneously, by many of the key financial networks from this year, is. The move in Europe, the US, and Asia is an acknowledgement that the world now needs a common language between financial institutions transferring funds cross-border – a task becoming increasingly fraught with regulatory and compliance pressures (as recent geo-political events testify) and under irresistible pressure from participants and their customers for better payments speed and transparency. Already, more than 70 countries have adopted elements of ISO 20022, many for domestic, low-value and instant payment schemes. But, over the next five years, those that haven’t may well find themselves at odds with the correspondent banking networks, unable to receive or send messages in the required format. How internal processes adapt to IS0 20022, which is predicated on using a common dictionary, a standard modelling methodology, and the use of extensible markup language (commonly known as XML) and abstract syntax notation (referred to as ASN.1) protocols, is mostly the concern of financial data teams and specialists in the high-end, interbank messaging market. That said, ISO 20022’s consequences will ripple through organisations, impact multiple business units and open doors on potential ffnews.com
new revenue. By 2025, it’s forecast that it will support 80 per cent of global transaction volumes and 87 per cent of their value. But between now and then is, arguably, the most testing stage of the migration to this new data-rich format: its co-existence with those that went before. A particular concern is how companies plugged into the dominant network, SWIFT, will support SWIFT’s legacy non-XML proprietary message format, known as MT, alongside the new MX messages. It’s important because more than 11,000 global SWIFT member institutions sent an average of 42 million messages per day through the network in 2021, using SWIFT’s core service for exchanging MT format financial messages, known as FIN. Andrew Muir, a financial transactions and ISO 20022 consultant currently working with high-end messaging software specialist Intercope, the company’s head of sales and marketing, Daragh Kirby, and Olaf Grossler, head of implementation and client support, recently joined a panel discussion and Q&A to help organisations face this challenge. Muir kicked off by acknowledging that SWIFT’s (and Europe’s) stop-start timetable for transition to ISO 20022 hasn’t helped
businesses engaged in an already complex preparation, although, given that the new ‘international language of payments’ has been flagged for several years, it’s still, in his view, an ‘underestimated challenge’. “Real-time gross settlement systems across the eurozone, in the UK, the US, Singapore, Hong Kong, the Philippines, Australia and elsewhere across the globe, will have migrated to ISO 20022 by the end of 2025,” said Muir. “Individual schemes already using ISO 20022 messages include SEPA Credit Transfers, SEPA Direct Debits and Instant Credit Transfers. Of course, correspondent banking starts from this November. And the picture keeps changing.” Only in January, SWIFT published updated usage guidelines and translation rules for its CBPR+ (Cross-border Payments and Reporting plus) specification, which defines how ISO 20022 is to be used for cross-border payments and cash reporting on the SWIFT network from November. The Bank of England also announced a significant change to its own ISO 20022 rollout plan, effectively removing the like-for-like deployment for CHAPS originally planned for this summer. Issue 11 | ThePaytechMagazine
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