Designed to streamline financial communications (and ultimately reduce costs of associated payments, funds, securities and foreign exchange trading), ISO 20022 is a single, common ‘language’ that can be used across business domains, communication networks or market infrastructures. As the agreed methodology increasingly used by the financial industry, ISO 20022 helps in the creation of such consistent messaging across business processes.
Australia plans to implement ISO 20022 in the New Payments Platform.
Today, bank executives must look closely at the ISO 20022 standard and understand how its adoption may impact their operations and investment plans. This is especially important as real-time payments become a reality.
In late 2013, Liz Oakes (Principal Advisor, KPMG in the UK) chaired a panel, which included Chris Hamilton, CEO of the Australian Payments Clearing Association, at the global SWIFT International Banking Operations Seminar (Sibos), which brought together five global leaders in the payments sector. ISO 20022 featured highly on the agenda.
“In Australia, we had lots of discussion with market players about what the right standard would be and, from that, developed a schema that replicated our existing payments system but with the ISO 20022 syntax and semantics. That’s allowed our banks, payment providers and vendors to understand and prepare for the implications of the shift towards ISO 20022.”
Chris Hamilton, CEO, Australian Payments Clearing Association.
The expert panel took a close look at four key trends and complexities that banks and payments participants must consider:
For attendees, developing a case for (and rationalising the need to adopt) the standard was a key topic. The panel discussed the costs and complexities involved and the benefits of looking at such change as an opportunity.
To all involved, a key point was that while the standard is being applied across jurisdictions, it is being applied differently – let alone the complex nature of updating legacy systems. The discussion took a close look at what banks and market infrastructure players are currently doing regarding their implementations.
The panel also raised the topic of the ways that banks and payment participants are starting to think about how they drive interoperability with their larger global clients. And ultimately, why adopting the standard should be seen as an opportunity to improve their customer services, develop new products or enhance their overall efficiency.
A significant issue raised by the panel was the number of challenges facing those who weren’t yet prepared to adopt ISO 20022 and the problems that will ultimately occur when all others around them have adopted the standard. For many, deciding on the right timing and their roadmap for adoption is the biggest challenge.
For a full overview of each key theme, including the highlights and key questions asked of each panellist, please read the Sibos Community Session Leveraging ISO 20022 for real time payments article.