Interview

How global businesses can leverage the ISO 20022 standard to enhance their operations across borders

Tuesday 23 January 2024 10:04 CET | Editor: Diana Lupuleac | Interview

Ulrike Guigui and Raquel Gomez Sirera from Deloitte share insights on how global businesses can leverage the ISO 20022 standard to enhance their operations across borders and the regulatory aspects of adopting it.

 

Could you provide an overview of ISO 20022 and its significance in the context of global payments?

ISO 20022 is the newest global message format structure used for payments, and it provides rich, structured data to create consistent payments messaging, including for high-value, batch, and real-time payments. Legacy payments data is often fragmented and disparate, and ISO 20022 empowers banks and corporates to leverage a uniform set of data fields, opening the door to an enhanced, interoperable payments ecosystem.

Overall, ISO 20022 offers a window to a more connected world underpinned by safer payments, richer data, and faster straight-through processing for both domestic and cross-border payments. Payments networks across the globe are already using the ISO standard – real-time payments systems have widely adopted the standard, and many high-value systems have also announced plans to support ISO 20022, including Fedwire in the US, Lynx in Canada, and SWIFT for cross-border payments.

How can global businesses leverage the ISO 20022 standard to enhance their operations across borders?

Global organisations can leverage the ISO 20022 standard to achieve cost reduction, greater interoperability, and an enhanced customer experience while enabling easier cross-border transacting. Some potential benefits include:

  • Standardised, structured data that reduces costs associated with payments transacting, accounting, and reconciliation;

  • Interoperability across geographies, systems, and interfaces, reducing payments friction and bolstering operating efficiency;

  • Richer data, which translates into enhanced payments and customer insights that help enable new use cases, improve data analytics, and provide a better understanding of the customer.


In what ways does ISO 20022 facilitate cross-border payments' compliance with anti-money laundering (AML) and know your customer (KYC) regulations, and how does this impact the security and trust in ecommerce transactions on a global scale?

Leveraging the enhanced, richer ISO data will help augment existing fraud and AML capabilities to better monitor payments and customer activity. Financial institutions around the globe will speak a common language, which can make it easier to facilitate enhanced monitoring across geographies – thus, improving hit rates, reducing fraud, and decreasing false positives. This is expected to enhance trust in transacting online, as improved fraud capabilities also help increase payments transparency, security, and straight-through processing.

How does ISO 20022 support real-time payments and data-rich transactions, and what implications does this have for cross-border ecommerce in terms of customer experience and transaction tracking?

With many real-time payments systems using the ISO 20022 format, these systems can capture the value of instant funds availability, while also reducing payment errors, fraud, and friction.

Additionally, enhancements to customer experience are prevalent through improvements to existing payments use cases and the development of net new ones. Use cases like Request-to-Pay, partial pay, or bill split highlight the capabilities of ISO 20022, where structured remittance data enables banks to provide their customers with more information regarding their payments activity and payment options that are more flexible. This will also help banks to better understand their own domestic and cross-border payments activity and data.

ISO 20022 adoption is affected by differing regulatory frameworks in various regions. Could you expand on the regulatory aspects and outcomes of adopting ISO 20022 for global payments, as well as how organisations can navigate these challenges effectively?

ISO 20022’s adoption is largely shaped by the differing compliance timelines mandated by regional and global payments networks. As a result of these divergent timelines, an ISO maturity spectrum has developed where current progress largely depends on participation in regional versus global payment schemes – and the level of complexity in the organisation’s payments infrastructure.

While banks are recognising the importance of meeting minimum compliance requirements for local networks, in our experience, it has been the larger banks that have started considering how to capture the longer-term value of ISO. Meanwhile, global leaders are the most mature through participation in multiple regional and global networks, and they are not only focused on minimum compliance but also on capitalising on the long-term benefits of ISO 20022.

While the level of effort will vary depending on an organisation’s ISO maturity, several factors remain important consideration points in the ISO landscape. Companies should consider the complexity of their technology infrastructure, their data quality and standards, testing requirements, client/vendor coordination, and employee training.

Through our prior work supporting clients with their ISO readiness, we have seen organisations’ need for support across the ISO journey, including initial planning and target state strategy, impact assessments, data mapping, requirements, development, and testing.

 

This editorial piece was first published in The Paypers' Cross-Border Payments and Ecommerce Report 2023–2024, which offers a deep-dive into the fast-growing cross-border market and aims to serve as the ultimate source of information for businesses interested in expanding globally.


About Ulrike Guigui

Ulrike Guigui is a Managing Director at Deloitte Consulting, where she leads engagements focused on helping the top US banks and payment companies address their pressing challenges in the areas of growth, operating model design, and payment transformation. Ulrike has 25+ years of experience in leading transformative change across financial services organisations.

 

About Raquel Gomez Sirera

Raquel Gomez Sirera is a Senior Manager who advises banks on transforming their corporate payments through product innovation and technology. Raquel leads Deloitte’s ISO 20022 efforts in coordination with our global firms and partners, and her functional experience extends across commercial banking and treasury management.

 

 

About Deloitte

Deloitte provides industry-leading audit, consulting, tax, and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500 and more than 8,500 US-based private companies. Learn how Deloitte’s approximately 457,000 people worldwide connect for impact here.

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Keywords: cross-border payments, regulation, ISO 20022, customer experience, AML, KYC, cross-border ecommerce
Categories: Payments & Commerce
Companies: Deloitte
Countries: World
This article is part of category

Payments & Commerce

Deloitte

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