For Standard Chartered, challenges when it comes to payments can be viewed through two lenses: global and regional. Global challenges are driven by the inadequacy of current formats that banks and market clearing infrastructures use to exchange payment data.
From a regional perspective, the vast array of formats that have evolved at the clearing infrastructure level has proven problematic. Some of these formats are regulatory in nature, designed to uphold capital and FX controls that are mandated to understand the purpose of payments.
What’s more, Asia is notorious for having multiple payment and clearing formats, languages and regulatory controls. As such, reporting obligations require a harmonised approach. A case study from SWIFT shows how the adoption of ISO 20022 will help this. It will lead to uniformity in data exchanged between market infrastructure providers (ACH/RTGS), market participants like banks and end-clients.
“Corporates in Asia do not use ISO 20022 yet - reasons vary, from corporate priorities and resistance to change, to market infrastructures not supporting ISO, and clients not fully understanding the benefits that it can bring for their business” says Ankur Kanwar, cash product head, Standard Chartered, Singapore and ASEAN. "We are educating our clients around the benefits of using ISO 20022 messaging formats to improve the payment experience when doing commerce with Asia, driving more prosperity via better and seamless payments."
ISO 20022: a cost/benefit dichotomy
While the adoption of ISO 20022 requires investment, the benefits are wide ranging. The new value creation through better cash management will drive new value propositions across the bank’s product suite in areas such as liquidity management.
From a compliance perspective, there is a palpable reduction in both the cost and speed of due diligence. With digital payments on the rise, and speed a critical KPI for retail/corporate clients, a unified and borderless payments language is critical.
The new standards also bring greater interoperability across various settlements systems and will drive down the cost of transactions. When it comes to the reconciliation of receivables, un-truncated and data-rich messaging allows for the simple tracking of payments end-to-end.
A watershed moment
Adopting ISO 20022 can pose technological challenges given the numerous systems required to process a payment. For Standard Chartered, effective change management means synchronising various projects, upgrading or replacing legacy systems, and introducing new products to allow them to leverage the synergies that exist. This accelerates the timeline and helps avoid throwaway investment.
“It’s clear that there is great promise and we can plan to harness a great deal of returns from the significant investment in ISO 20022 the industry is making,” says Shirish Wadivkar, global head Correspondent Banking Products at Standard Chartered. “But only if we look at this not as a mandatory technology-led change, focused on adherence to minimal change standards; but see it for what it truly represents - a watershed moment for the global payment business.”
Like this item? Get our Weekly Update newsletter. Subscribe today