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Is there a business case for ISO 20022? YES = strategic part of bank agnosticity

Is there truly a business case for implementing ISO 20022 in the United States was the question posed to attendees of the March Payments Innovation Alliance meeting in Los Angeles. AFP’s write up of the meeting claimed that many believe that at the moment U.S. companies do not have much incentive to adopt the ISO 20022 standard.

Payments standards development

At the meeting it was accepted that the ISO 20022 standard is currently being implemented around the world as the new standard for payments. Nevertheless, much of the discussions at the meeting focused on a U.S. adoption of ISO 20022 was worth it, particularly the issues of “standards within a standard” and the financial business case concept, or lack thereof. 

AFP report that, “At this point, the financial business case for ISO 20022 in the U.S. is fairly weak. So instead, the focus is more strategic. This strategic focus is very important, especially considering that much of the developed world are using, or will use, the ISO 20022 standard.”

However, AFP raised several strategic issues:

  • can the U.S. afford to ignore it? In the long run, probably not. 
  • can corporations be enticed to voluntarily make this kind of switch (in the current environment) to their payments processes only based on a general strategic basis? 
  • SEPA adoption of ISO 20022 only happened when it was mandated, and mandating such a change in the U.S. will not happen.

AFP report that the conclusion was that, “Therefore, to further advance ISO 20022 in the U.S., additional education will be necessary. The ISO 20022 Stakeholders Group, consisting of the Federal Reserve, NACHA, The Clearing House and ASC X9, plans to embark on an extensive outreach program to educate businesses, while at the same time also learning from stakeholders what is important to them when considering a change of payments standards.”

Managing commercial pressures

But, and it is a big BUT, when a bank exits the cash management business and/or changes business direction it happens very quickly, e.g. RBS - see. Being bank agnostic is becoming vital, it is the protection against not only the impact of regulation and bank getting out of the business, but also against being over charged or under served, etc. 


CTMfile take: Adopting ISO 20022 standards and procedures will cut costs globally, and minimise bank counter-party exposures considerably. Good cash management banks are adopting ISO 20022 world-wide; MNCs should do the same including in the USA.

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