In the first iteration of this two-part blog series, we called on Volante’s recently published white paper to provide a brief overview of requirements for institutions as they prepare for SWIFT’s enabling of ISO 20022 transactions, starting this November. For Part 2, we’ll look at a few advantages of integrating the new standard and highlight the importance of implementing a migration strategy that aims to maximize these benefits wherever possible.
The Universal Benefits of ISO 20022
Before conceiving of an individualized strategy to take advantage of ISO 20022 migration, it helps to first understand some of the universal benefits of the standard for financial institutions around the world.
First, the structured, data-rich model offered by the ISO 20022 standard should be understood as an evolutionary vehicle, allowing banks to depart from increasingly limited legacy payment systems, and arrive at one that reflects the capabilities of modern technology, enhancing the speed, efficiency, and security of cross-border transactions.
Additionally, ISO 20022 introduces a new level of transparency and traceability to cross-border payments, providing end users with insights into transactions down to the smallest detail, including the amount of commission collected on an individual payment. According to Angélica Arana, Head of Payments Technology Transformation at Citibanamex, such a development has been needed for quite some time.
“We often don’t know when [a transaction] will be received, how many agents it went through, and how much we were charged over the process,” says Arana, speaking on the inefficiencies of the current international payments infrastructure. “This information will now be available to us as users.”
Of course, these are only a few of the myriad benefits provided by the new standard, and the possibilities created by ISO 20022 migration extend far beyond universal improvements to the cross-border payments eco-system.
Maximizing Benefits Through Value-Added Services
Despite the new messaging standard being a significant improvement to legacy payments processes in general, it can’t be stressed enough that the benefits of ISO 20022 will likely not be distributed equally but will rather favor institutions who integrate the standard alongside a well-conceived strategy and objectives.
As Mario Medina from SWIFT points out, ISO 20022 migration is much more than an IT project and is in fact an opportunity for organizations to offer new “value-added services.” For example, an ISO 20022-enabled institution might stand out from competitors by allowing end users to cancel a remittance before the transaction has been completed.
According to Arana, many additional services have the potential to be monetized because of the new standard, but in order to take advantage, institutions will need to be proactive, embracing ISO 20022 not only from an IT perspective, but from the perspective of the organization as a whole. To achieve this, Arana notes, institutions will first need to address challenges related to changing workflows and focus on increasing the organization’s capacity to receive and process high volumes of information.
“Because if you do not do that, you are not taking advantage of what is coming,” she says. “[Institutions] should have a business strategy in line with those changes.”
To learn about the benefits of ISO 20022 integration in more depth, as well as how your organization can maximize the positive impacts of migration, click here to download Volante’s full white paper, ISO 20022: Building a Universal Language for Payments.