The time is now for every player in payments to begin their ISO 20022 migration, if it’s not already underway. As discussed in my previous post, the standard’s tipping point is rapidly approaching.
Migration planning will be different for every organization, but the end goal is the same: building a solid benefits case for the new standard.
Why a benefits case and not a business case? Adopting the ISO 20022 standard is all but certain to lead to innovations and efficiencies for the payments industry. But because of the interdependencies and complexities of its adoption, specifying and quantifying the impact of the standard before its adoption is virtually impossible.
Further, the investments needed to embrace ISO 20022 and participate in the payments systems of tomorrow are significant and unavoidable.
In other words, the business case for ISO 20022 migration, built on current information, may be unsound. But a benefits case can look past this and help financial services firms seize some exciting opportunities for the entire industry.
- Global interoperability
- Rich remittance data
- Increased data quality through enhanced structure and granularity
- Uniform and reusable terms and message components
- Harmonization across all payment types
- A base for innovative service offerings and products
- Lower overall operational costs
Based on these advantages, adoption of the new standard will enable individual firms to:
- Build new APIs based on ISO 20022
- Reduce friction with higher automation, enhanced straight-through processing and redesigned processes
- Lower costs by dismantling obsolete legacy applications
- Increase the effectiveness of fraud detection and prevention measures
- Develop new integrated consumer-oriented services and products to meet the increasing demand for speed, transparency and granular tracking information (for example, the SWIFT gpi service)
Each individual bank will need to assess its own payments customer base, market position and strategy to decide which of these benefits should be included in its benefits case.
But without creating a strong case early in the migration, achieving a specific benefit from embracing ISO 20022 is less likely.