ISO 20022 adoption is a significant step forward in the evolution of global payments. Its structured data brings about automation and interoperability, leading to improved efficiency, innovation, and customer insights.

The journey has just started, but the future appears promising for financial institutions and their customers. Speaking at Sibos 2023, Jeremy McDougall, Director of Payments at EY, emphasized the importance of data, likening it to oil that needs refining to be valuable. Financial institutions have vast payments data, but its current format isn't ideal. ISO 20022 offers a structured framework for data presentation. Those who refine this data effectively will emerge as winners.

So, what are the benefits of adopting ISO 20022? Here are the top 5, as highlighted by experts at Sibos.

1. Streamline financial crime compliance

ISO 20022 adoption is revolutionizing global payments by introducing rich, structured data that enhances automation and interoperability, leading to improved efficiency, innovation, and customer insights.

Jeremy McDougall, Director of Payments at EY, emphasized the value of refining data, likening it to oil that must be processed to be valuable. ISO 20022 offers a structured framework for presenting data, benefiting financial institutions and their customers.

One major benefit of ISO 20022 adoption is streamlined financial crime compliance. Leading financial institutions are already seeing a reduction in false positives in sanctions screening, with potential savings of 25-30% once the standard is widely adopted. The structured format of ISO 20022 ensures clear identification and descriptions of information in each message, improving certainty in compliance processes.

Paula Roels, Head of Swift & Market Infrastructures at Deutsche Bank, highlighted how ISO 20022 standards, richness, and structure help in anti-financial crime compliance. By correctly using ISO 20022, transparency is increased, leading to fewer investigations on false positives and improved efficiency in the payment chain. ISO 20022 offers numerous benefits beyond compliance, contributing to a smoother, more efficient financial ecosystem.

2. Enhance customer insights

Enhancing customer insights is another significant advantage of ISO 20022 adoption. Cathy Newcombe, Senior Manager Swift Business Management at the Commonwealth Bank of Australia, highlighted the exciting outcomes for customers, especially in quickly and easily interrogating customer data.

Newcombe explained, "Understanding purpose codes and the insights they provide is crucial. With ISO 20022 adoption, we can isolate specific customer segments, such as students, with high confidence and efficiency. This is a substantial improvement from the current scenario, where queries return numerous potential keywords."

She further elaborated on the impact of ISO 20022 adoption on processing government benefits, noting that complex processes often result in unclaimed benefits amounting to millions of dollars annually. The Benefits Finder initiative, launched in 2019, has already helped customers recover over a billion dollars in benefits. The ability to interrogate ISO 20022's rich and structured data will streamline customer identification and revolutionize how customer needs are understood, leading to enhanced service offerings.

3. Improve payments exceptions and investigations

ISO 20022 adoption is poised to significantly improve payments exceptions and investigations, reducing the time and resources spent by automating up to 84% of messages. Dougal Middleton, Vice President of Enterprise Payments at Scotiabank, emphasized the industry's challenge of eliminating friction and reducing operational costs associated with manual investigations.

Middleton highlighted the impact of reducing friction points and exceptions on the client experience, underscoring the need for streamlining processes in financial institutions.

Paula Roels, Head of Swift & Market Infrastructures at Deutsche Bank, also emphasized ISO 20022's role in creating efficiencies across the payments industry. The structured data and rulebook provided by ISO 20022 messages enable standardization of processes and identification of investigations use cases. This standardization allows for full automation, traceability, and transparency throughout the lifecycle of each case, contributing to a more efficient and effective payments ecosystem.

4. Strengthen corporate treasury activities

ISO 20022's enhanced data elements are strengthening corporate treasury activities, as highlighted by Ross Jones, Head of Payments at Barclays Global Transaction Banking. He emphasized how ISO 20022's improved data elements facilitate quicker reconciliation, especially for large corporations and multinationals operating in complex environments and challenging markets.

Jones explained, "With instant and accurate information on real-time liquidity positions, corporates can automate models and tools, enabling better-informed decisions on an intra-day basis."

Furthermore, Jones noted that while customers may not explicitly ask for ISO 20022, they demand reduced friction, enhanced straight-through processing (STP), and improved reconciliation. These advancements in banking infrastructure go beyond compliance or back-end efficiency; they are essential enablers that allow customers to streamline operations and focus on core business activities.

5. Offer new value propositions

Financial institutions are constantly seeking ways to expand their market share by introducing new products, capabilities, or leveraging ISO 20022 payment data in innovative ways.

Cathy Newcombe highlighted the potential insights gained from combining and analyzing underlying bank and payments data, empowering financial institutions to ask, "How else can we assist this customer?"

Ross Jones discussed the new use cases made possible by richer and more structured data. "One key benefit is the ability to prioritize payments, facilitated by ISO and purpose payments codes. For example, government welfare, child credit, pension, and salary payments can be prioritized based on data insights. This global advocacy and collaboration with customers demonstrate a strong social responsibility."

These discussions emphasize the value of ISO 20022 in offering new value propositions, driving innovation, and enhancing customer experiences in the financial industry.

Global adoption of ISO 20022 is the future of payments

The global adoption of ISO 20022 represents the future of payments, as highlighted by Dougal Middleton, emphasizing its strategic role in the bank's modernization journey.

"It's not just a standard; it's a fundamental building block of our payment ecosystem and infrastructure," Middleton stated. "Structured data now forms the foundation of our operations, enabling better reconciliation, improved service offerings, and increased efficiency for our customers, whether in domestic or cross-border transactions."

The shift to ISO 20022 globally goes beyond regulatory compliance; it signifies a strategic shift towards a more integrated, efficient, and customer-centric payments ecosystem. The outlook for the future is optimistic, with ISO 20022 paving the way for enhanced payment experiences and streamlined operations across the industry.

Migrating to ISO 20022? How TechZert can help you choose the tailored solution?

TechZert offers tailored solutions to help financial institutions migrate to ISO 20022 seamlessly. We understand that ISO 20022 migration is about enhancing communication between financial institutions and users, facilitating faster and easier transactions. As a result, we play a crucial role in transforming the financial services industry by promoting a common language and model for payments data exchange.

Our ISO 20022 migration approach and assurance services encompass various elements:

1. Consultation Services: We provide consultation services to banks and financial institutions, analyzing their payments infrastructure and enhancing their processing capabilities. This includes assessing data volumes, real-time payments capabilities, daily liquidity assessments, compliance checks, and fraud detection and prevention measures.
2. Key Advantages and Benefits: Our approach ensures a smooth transition by understanding legacy infrastructures, setting clear migration timelines, addressing data-handling challenges, managing co-existence phases of multiple messaging standards, and ensuring compatibility during the transition.
3. Strategies for Successful Adoption: We employ three key strategies to successfully adopt ISO 20022: transformation and validation of legacy messaging into ISO 20022, upgrading and migrating to new messaging services without disrupting daily operations, and ensuring on-time completion to meet Swift timelines.

Before embarking on the migration journey, banks and financial institutions need to:

• Analyze their payments processing systems, infrastructures, and data volumes.
• Understand how their data will align with new standards.
• Assess internal capacity and readiness for ISO 20022 implementation.
• Ensure compliance with new market infrastructure requirements and correspondent banking schemes.

By following these steps and leveraging TechZert's expertise, banks and financial institutions can successfully migrate to ISO 20022 and reap the benefits of a more integrated and efficient payments ecosystem.