Voice of the Industry

Fasten your seat belts – shifts to ISO 20022 will speed ahead in 2022

Thursday 19 August 2021 08:45 CET | Editor: Alin Popa | Voice of the industry

Andrew Foulds, Director of Global Clearing Solutions and Product Management at Fiserv, guides us through the fast-paced adoption of ISO 20022. What does this standardised approach bring us?

As we near the end of 2021, the mindset of many in the payments world is firmly in the future, as the industry readies for the migration to ISO 20022. For financial institutions, this impactful shift offers significant business opportunities that extend well beyond compliance and mandates. 

ISO 20022 is a fundamental change in payments. The instrument will no longer be the focus – ‘a payment is a payment is a payment’ will truly come to be the mantra of payments professionals. Rather, the focus in this new world will be the data and information that moves with the payment, along with its potential to drive innovation and new revenue streams.

Possibilities are emerging to develop new services on the back of this data and information. This is only possible because of the unique functionalities that ISO 20022 will deliver: a common language for financial and business messaging and structured and extended data compared to existing legacy information sets. 

A Year of Change Ahead

High value or large value payment systems are mission critical for financial institutions and in 2022, they will take centre stage in the global move to ISO 20022. The high value market infrastructures in Europe, TARGET2 and EBA E1/S1, intend to migrate to fully fledged ISO 20022 in November 2022. Although their plans have been deferred by twelve months due to the delay by SWIFT, the two infrastructures are committed to the migration. In fact, a Plan B – moving to a limited version of ISO 20022 if the industry indicated it was not ready, is no longer a prospect. 

In the United Kingdom, the CHAPS RTGS infrastructure is phasing its migration. In June 2022 a like-for-like scheme, where ISO 20022 messages replicate as best they can the legacy message structures- will go-live. This will be followed in February 2023 with a fully-fledged scheme to replace the like-for-like.  

In North America, Canada will introduce ISO 20022 to its high value LYNX infrastructure, where there will be a co-existence period with legacy messaging, and in the United States, the Federal Reserve has announced plans for hybrid introduction. 

In the Middle East, high value infrastructure operators have not announced any migration plans for ISO 20022, but the region is busy rolling out Instant payment systems, which are ISO 20022 based. 

Asia Pacific is also moving toward ISO 20022, with Australia, Singapore and Hong Kong migrating their high value market infrastructures to ISO 20022 over the next two years. 

SWIFT will migrate Correspondent Banking to ISO 20022 and launch its much-anticipated Transaction Management Platform also in November 2022. 

All of this adds up to an intense period of activity for financial institutions as they seek to accommodate these changes and remain compliant with local and global mandates and business requirements, which is not an insignificant or trivial undertaking.  

Far Reaching Benefits

The use of ISO 20022 in so many market infrastructures (MIs) and systems offers the prospect of interoperability between those MIs, between regional payment systems, and seamless financial supply chains that can then align with physical supply chains. 

The use of structured data as specified by ISO 20022 will mean payment data can be transformed into business information through intelligent analysis and the use of artificial intelligence. Structured data and rich data that is being transported in the payment message and payment information can be combined and packaged into value-added services, giving insights into business behaviour and performance. 

Many banks and financial institutions have declared that they are on a digital transformation journey, with 85% saying that it is firmly on the agenda. ISO 20022 is a part of that development and holds significant potential for financial institutions that embrace it.

The Path Forward

Financial institutions that avoid ISO 20022 could be making an expensive mistake as they come under increasing competitive pressure from fintechs and BigTech that are eager and ready to take their place, evolving at a very agile pace. These tech-forward organisations have clearly demonstrated they have the bandwidth and ability to understand the value of data and to use it to offer customised services to customers. 

Financial institutions that look beyond compliance to embrace the opportunities of ISO 20022 will lead the payments transformation of 2022 and beyond, bringing the benefits of openness and interoperability to customers while enhancing the long-term viability of their own operations.

About Andrew Foulds

Andrew Foulds is Director of Global Clearing Solutions and Product Management at Fiserv and responsible for maintaining relationships and compliance with global market infrastructures. He has been in the payments industry for over 20 years and has held various roles across the globe combining his data expertise and commercial experience. Prior to joining Enterprise Payments Solutions at Fiserv, Andrew was with SWIFT and part of the management team that delivered the SWIFTRef data business and built it into the success it is today. 

He has extensive experience in developing and managing relationships and joint initiatives with payments industry bodies, managing key projects with a number of payment authorities including European Payments Council, Euro Banking Association, Pay UK and Banking and Payments Federation Ireland. 

About Fiserv

Fiserv aspires to move money and information in a way that moves the world. As a global leader in payments and financial technology, the company helps clients achieve best-in-class results through a commitment to innovation and excellence in areas including account processing and digital banking solutions; card issuer processing and network services; payments; ecommerce; merchant acquiring and processing; and the Clover cloud-based point-of-sale solution. Fiserv is a member of the S&P 50 Index and the FORTUNE 500, and is among the FORTUNE World’s Most Admired Companies. Visit fiserv.com and follow on social media for more information and the latest company news.

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Keywords: ISO 20022, regulation, financial institutions, SWIFT, digitalisation
Categories: Banking & Fintech
Countries: World
This article is part of category

Banking & Fintech