28 JAN

How Banks and Financial Institutions Can Benefit from ISO 20022

Banking and financial institutions are going through an evolution as they transition their payment system from the SWIFT messages exchange network (ISO 15022) to the latest, highly structured, and data-rich ISO 20022 messaging standard.

As reported by SWIFT, for the next three years, there will be a co-existence window where both messaging standards will run.

By 2025, ISO 20022 will become the universal standard for high or large-value payment systems of all reserve currencies.

ISO 20022, introduced by the International Organization for Standardization, is an open global standard for exchanging electronic messages between financial institutions.

The standard was introduced in 2005 to give financial institutions a standard format for developing messages in one eXtensible Markup Language (XML) rule.

The ISO 20022 standard covers financial data between financial organizations, including payment transactions, credit and debit transactions, security trading, and other financial information.

In Europe, SWIFT and the European Central Bank have announced the standard's ISO 20022 go-live dates of March 2023.

ISO 20022 messaging standard offers its users a wide range of benefits, from a Higher standard of protection against financial crime to Better cash and liquidity risk management.

The standard was introduced in 2005 to give financial institutions a standard format for developing messages in one eXtensible Markup Language (XML) rule.

The ISO 20022 standard covers financial data between financial organizations, including payment transactions, credit and debit transactions, security trading, and other financial information.

In Europe, SWIFT and the European Central Bank have announced the standard's ISO 20022 go-live dates of March 2023.

ISO 20022 messaging standard offers its users a wide range of benefits, from a Higher standard of protection against financial crime to Better cash and liquidity risk management.

The Benefits of ISO 20022

Protection against Financial Fraud, AML, and Sanctions

ISO 20022 allows financial institutions to have a greater granularity of payment information, meaning organizations will get more detailed payee information, enabling risk and compliance teams to have a better understanding of the destination and origin of payments.

Under the traditional system, payments are usually flagged by a sanctions filter which triggers an investigation.

In the case of ISO 20022, payments are automatically processed without delay, enabling the compliance team to focus on genuine dangers.

Increased Efficiency and Automation

ISO 20022 can provide consistency to operational processes and procedures by offering a standardized approach to messaging formats.

This standardized approach improves efficiencies and can lead to cost savings with automated and streamlined settlement and reconciliation processes.

Better cash and liquidity risk management

ISO 20022 provides better visibility of payment traffic inflows and outflows due to its increased granularity in payment data and faster payment processing and reconciliations.

Treasury functions will have improved visibility over cash and near real-time perspective of liquidity flows, providing more robust forecasting capabilities.

Better Data Analytics

ISO 20022 provides consistent, structured, and standardized data to institutions. Having enriched data will encourage financial organizations to deliver improved customer experience to their users.

Next Steps

SWIFT has fully committed to adopting ISO 20022 for some messages by November 2025 and is urging all financial institutions to adopt the standard for all cross-border payments

Source: SWIFT

We can see a lot of banking and financial institutions migrating from the SWIFT service to ISO 20022 as they don't want to be left behind.

Now, these institutions must find the right partner to make this transition as seamless as possible.

With Millennium Payment Hub, enterprises can seamlessly and effectively migrate to SWIFT GPI and ISO 20022 with minimal impact on existing legacy systems.

Millennium Payment Hub uses ISO 20022, an international standard that aims to enhance communication interoperability between financial institutions, their market infrastructures, and their end-user communities.

The payment hub provides MT to ISO20022 and ISO20022 to MT conversion. Some of our formats include:

  • ● PACS 008 V08 - MT103
  • ● PACS 009 V08 - MT 202/MT202 COV/MT2 00
  • ● CAMT 053 V08 - MT940
  • ● CAMT 052 V08 - MT942
  • ● CAMT 054 V08 - MT900/MT910
  • ● CAMT 057 V08 – MT210

Contact us to schedule a call with our team of experts.

Source: Payment Components , Finextra , Fulcrum Digital

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