Reed Luhtanen, Executive Director, FPC
The progress towards ubiquitous faster payments on a global scale is gaining momentum. With the global transition to ISO 20022, originally slated to take place in November, and now on track for a March 2023 deadline, we will see all payment systems migrate to the ISO 20022 message format, providing for a universal standard for the processing of high-value payments, including faster payments.
And as this initiative scales, so, too, does the work of the FPC. For example, in November, we held a Town Hall event for FPC Members, ISO 20022 Format Changes for Banks and Getting Ready to Use the New Format. Barry Tooker, Principal, TransactionBanker.com; Andrew Muir, Principal Consultant, Nth Exception; and Biju Suresh Babu, Managing Director, Banking and Financial Services, Fiorano, discussed in detail the magnitude of this global endeavor. According to the panelists, the ISO 20022 conversion is like “Y2K++”. And it is a sizeable lift for the industry, as panelists articulated that “it is taking four times longer than expected and costing 10 times more than estimated.”
As Tooker explained, “This affects all of the different parts and pieces of a payment workflow. The migration from legacy messaging to the highly structured and data rich ISO 20002 message introduces new data fields and back-office processes that have to be taken into consideration. But the good news is it creates greater interoperability among various payment systems and improves data flows, which will increase efficiency of transaction processing.” Babu added, “It is big data for payments.”
Panelists encouraged financial institutions and other industry stakeholders to continue preparing to ensure readiness when the March deadline hits. It’s not a simple compliance project, remarked Babu. “It needs to be looked at organization wide, not as a siloed project.” Tooker added, “You have to involve all the different stakeholders and application providers.”
Understanding the challenge and significance of the ISO 20022 migration, we’ve also partnered with FPC Member Wells Fargo to develop a new educational resource, ISO 20022: Exploring the Impact of a New Data Structure on the Payments Ecosystem. This white paper outlines what ISO 20022 is; the benefits of moving from proprietary messages to standard ISO 20022 messaging; and where industry stakeholders stand in relation to their adoption/migration efforts and the overarching global timeline. Most importantly, the resource offers strategies to help the industry continue its progress towards the full ISO 20022 migration, including the following three main tips to help ease the transition:
Domestically, faster payments are here and are gaining momentum. And globally, faster payments continue to proliferate. But with the ISO 20022 transition, we are now beginning to see a concerted effort to bring ubiquity to faster payments across the globe; to bring about more efficient and seamless transactions; and to bring reduced costs and improved services and experiences for financial service providers and their customers.
For more information on ISO 20022 and other significant faster payments topics, visit the FPC’s Knowledge Center. To get involved and support development of resources to advance faster payments, consider becoming an FPC Member. Learn more at www.Why-Join-the-FPC.