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Surviving ISO 20022 migration – a report and a product

Last week, there was an important reminder of the scale of the change in payment systems to ISO 20022 and how corporates have to manage the transformation.

Deutsche Bank’s report

Deutsche Bank released the third instalment in their excellent “Guide to ISO 20022 migration” series, which offers a comprehensive update on the industry shift to the de facto global standard for financial messaging ISO 20022.

This paper comes at a critical time for the ISO 20022 migration, with a number of changes to existing timelines and strategies from SWIFT and the world’s major market infrastructures having been announced this year.

On 7 May 2020, an alliance of four European banking bodies – the European Banking Federation (EBF), European Savings Banks Group (ESBG), European Association of Co-operative Banks (EACB) and the European Association of Public Banks (EAPB) – requested that the ECB delay the T2-T2S consolidation project by 12 months citing two primary motivators for the delay: the impact of Covid-19 and SWIFT’s decision to delay its own migration.

Deutsche Bank summarises Swift’s new migration approach:

Source & Copyright©2020 -  Deutsche Bank

The report shows the scale of the change required in this simple diagram of the transaction lifecycle under the new SWIFT platform:

Source & Copyright©2020 – Deutsche Bank

No wonder Christian Westerhaus, Head of Cash Products, Cash Management, Deutsche Bank believes that “Now more than ever, with shifting timelines and strained resources, it is vital that banks and corporates alike do not view the ISO 20022 migration as just another project that can be put on the back burner. The delays in the correspondent banking space, and across several market infrastructures, should not be seen as an opportunity for banks to take their foot off the pedal. The journey to ISO 20022 is still moving ahead at speed – and internal projects need to reflect this.”

Financial Message Checker

Many companies are supplying systems and APIs, and services to help banks and corporates cope with the move to ISO 20022. A leading example is from Payment Components who provide The Financial Message Checker to enable banks and corporates to paste their MT messages into the Checker to translate and see the ISO20022 equivalent using the CBPR+ rules and validation guidelines. And vice versa.

They say “Why waste time keeping up-to-date with the Cross-Border Payments and Reporting Plus (CBPR+) working group rules?” These cross-border payments usage guidelines will continue to be the basis for ISO 20022 implementation in the correspondent banking space and which corporates will have to comply with.

CTMfile take: ISO 20022 is the biggest ever change to the traditional payment system standards and infrastructure, but what, right now, do corporates have to do? Or should you just rely on your banks and system suppliers?

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