SECTOR REPORT: CARDS & PAYMENTS

“Prioritising which jurisdictions, products and services should be migrated first will create a competition for global funds and resources to manage the project. Because ISO 20022 return on investment (ROI) tends to be long term due to migration effort complexities, banks will need to evaluate their business case to determine when cost savings will take effect and strategically communicate the benefits to program sponsors,” EY said.

Whilst standardisation of messages will be more beneficial for payments processing in the longterm, conversion to one standard will affect the whole cross-border payment processing, especially for clients, who will have to familiarise with a new process.

refinancing opportunities,”

Agarwal and Byrne said. EY’s Lucas, Gancz, and Forman agreed that the significant improvements to the payment procedure and newly added insights from the ISO 20022 enriched data will provide notable monetisation opportunities for banks. “Robust data provided by ISO 20022 standards enables banks and nonbanks to better identify customer trends and provide improved services to their clients,” the experts said.

Navigating choppy waters

Whilst the standardisation had been a long time coming for the financial industry, the transition would still be a big challenge for banks, who face navigating varying countrymandated timelines.

“Banks need to balance an array of timelines and custom requirements across each market. This is especially challenging, as there is not a one-size-fits-all approach to managing system upgrades across the ecosystem to be compliant,” EY’s Lucas, Gancz, and Forman pointed out in their report.

In particular, EY noted four challenges that its clients faced while migrating to ISO 20022 standards: global prioritisation and resourcing; consistent interpretations of data; length of time before benefits are realised; and operational impact.

Migrating to ISO 20022 standards requires banks to invest heavily.

“Conversion will impact payment initiation, client information, payment channels and payment processing. [It] will require careful consideration and time to reflect the new standard,” EY noted.

This lead time will further require internal rework and delay the benefits related to customer journeys. Banks and companies will need to factor in the impact to their internal systems that do not share the same migration priorities as their core processing applications. In particular, EY said that those used for accounting, reconciliation and liquidity management may require legacy tech to be retrofitted.

“To establish a seamless transition to ISO 20022, banks should focus on building interim solutions that support business continuity, while simultaneously focusing on updating legacy systems,” it said.