With SIBOS taking place next week (26-29 September) in Geneva, here is a look at the current state of international financial messaging standards and their future applications.

Challenges

Standards are the basis of all types of trustworthy, reliable, digital communication, not just in the payments industry but with potential applications in all aspects of our lives. The XML-based ISO20022 standards have come a long way since they were first developed in the early 2000s and they are now nearing maturity, according to one of SWIFT's standards experts, Paul Miserez. In a series of blogposts, he writes that one of the challenges now facing the standards community is to ensure they are adhered to and applied in new-use scenarios.

An example is the use and development of devices connected via the Internet of Things (IoT) to other machines and devices, where payments and financial communication is exchanged between devices and financial institutions. In his post, Miserez writes: “Incredibly, it seems that we're still much better at designing standards than we are at making them known, attractive, accessible and consumable by new audiences.”

ISO20022 and the Internet of Things

One of the scenarios mentioned by SWIFT's head of standards, Stephen Lindsay, is the way that ISO 20022 standards for business communication will in future be an important part of the business case for driverless cars, which could be provided in the form of car-sharing fleets. The Internet of Things (IoT) would also play a part in operating such automated, car-sharing services.

Put in the context of how the payments industry would need to fit into such a business scenario, SWIFT's Jamie Osborne explains that it would be preferable for a car in constant, shared use to monitor and take care of its own maintenance to ensure it's road-worthy at all times. He says: “...the car will make its own decisions about its day-to-day finances as it is highly undesirable to be sitting around waiting for human intervention at any point.”

Investment needed in financial business standardisation

The car will need to pay for maintenance and repairs, fuel or power, insurance, road tolls, etc, so there is a need for investment in financial business standardisation to support the increasingly complex financial operations involved in such business scenarios using automated machines and the IoT. This will be crucial in enabling IoT devices to communicate safely with financial institutions.

New standards for blockchain

In his blog post series, Miserez also asks how ISO 20022 will shape our development and use of distributed ledger technology (DLT). SWIFT's research suggests there is clear potential for the use of DLT and smart contracts in the financial world – however, existing standards do not cover all these potential applications.

Quoting his colleague Stephen Lindsay, Miserez writes: “As the industry evolves DLT/SC-specific standards, ISO 20022 will always provide a great foundation, in terms of both existing business content and approach.”