The industry is at a critical point in its migration to ISO 20022. Deadlines are looming, and while banks will always push for extensions, the industry needs to prepare for what may happen next. “Hope for the best, plan for the worst” may seem trite when considering single transactions can exceed €1 billion, but unless the industry takes stock, it is impossible to decide what a plan needs to address. Given the impact of the pandemic, banks also need to re-examine their own initial plans and assumptions.
This examination is taking place against a backdrop of banks facing a series of dilemmas. They have regulatory and market mandates that are due shortly, they face significant pressure on budgets, and they all believe the future will ask much more of them. A recent Celent survey shows that 74% of banks are looking to cut costs. 63% responded by saying they had only done the bare minimum required when it came to taking a comprehensive approach to future-proofing their business. The expectation is that many banks will likewise do the bare minimum when it comes to approaching migration to ISO 20022. As a result, issues will likely unfold as things shake out, meaning banks will be forced to juggle.
At this critical juncture, banks can take a few steps for a path forward in their ISO 20022 migration. First, a candid assessment needs to be made of where each bank sits. Plans should then be formulated that address both the short- and long-term. Transformation services are great options for addressing compliance issues in the near-term, yet banks should also consider the long-term and begin planning for a more holistic approach.
Survival of the fittest
“The Race to ISO 20022“ report written by Celent is based on a large, global survey of corporate and retail banks from over 28 countries, providing a State of the Nations for Payments snapshot. The survey covers how banks were impacted by COVID-19, and where they are in terms of payments technology modernization across payment types and migration to ISO 20022.
The report also analyzes several different implications of ISO 20022 migration that banks need to consider; for example, how they can prepare against looming deadlines by thinking through the following:
- A detailed, honest review of systems around high-value transactions
- A review of compliance aspects
- An examination of whether the solutions in place are really future-proof
- What technology systems will best deliver in an accelerating environment.
As in the natural world, the secret to surviving evolutionary pressures is rapid adaptation. That is why payments modernization is so necessary: by gaining the freedom to evolve past their legacy payments technology infrastructures, banks can accelerate the modernization of their payments businesses. Institutions that take the right approach will be ideally positioned to win the “survival of the fittest” race and increase their market share; those that do not will be relegated to irrelevance or extinction.
To better understand where banks are in their moves to ISO 20022, and how to best assess implications of ISO 20022 migration, download your copy of the report.