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US FIs not ready to meet ISO 20022 business demand - Industry roundup: 4 March

US FIs not ready to meet ISO 20022 business demand

The impending March 2025 migration deadline of FedWire to the ISO 20022 standard by all financial institutions (FIs) presents a strategic opportunity to revolutionise their payment infrastructure and services, according to a Datos report, sponsored by Finzly.

The survey of US corporate finance professionals from 1,037 midsize and large organisations found that around 57% are interested in using automated payables and receivables software, with 46% saying they plan to use ISO 20022 for this purpose. Some 17% are already using the ISO standard. This challenges the perception that businesses are not interested in utilising the new standard and gives FIs a clear business case for incorporating ISO 20022 standards into strategic roadmap prioritisation efforts in 2024.

ISO 20022 presents various benefits for FIs, including improved payment services, strengthened customer relationships, and diversified revenue streams. Furthermore, it offers unparalleled flexibility, interoperability, and efficiency compared to legacy formats, positioning FIs for long-term success in an increasingly digital economy.

The survey results highlight the immediate market opportunity for FIs to capitalise on existing customer demand for intelligent payment routing and embedded banking services enabled by ISO 20022 messaging standards.

With the March 2025 deadline looming, FIs face the critical task of implementing a cohesive strategy and selecting a suitable vendor partner to navigate the complexities of ISO 20022. Failure to do so could leave FIs at a competitive disadvantage and expose them to operational risks in an evolving landscape.

“The transition to ISO 20022 is more than a technical upgrade - it’s a strategic move to enhance efficiency, interoperability, and security in payment systems,” said Erika Baumann, Director of Commercial Banking & Payments for Datos, “FIs must embrace this change to remain competitive and future-proof their operations.”


Growth for G-20 economies to stabilise at modestly lower levels in 2024

The global economy is transitioning to a post-pandemic equilibrium with a steady normalisation in economic activity across major advanced and emerging markets, according to a new report from Moody’s Investors Service. A soft landing appears within reach for several advanced economies because of effective policy manoeuvring, improved supply-demand balances and good fortune such as mild winters in Europe. 

In addition to a sturdy US (Aaa negative) economy, sustained and stronger-than-expected post-pandemic recoveries in several emerging market countries make for a constructive growth picture. The US Federal Reserve (Fed) and the European Central Bank (ECB) will likely start easing rates in the second quarter. Geopolitical risks and inflation linger as potential threats to the outlook. The global production and trade landscape will evolve in concert with geopolitical shifts. Financial risks remain on Moody’s radar.

The report highlights that G-20 global growth is likely to decline from 2022 and 2023 levels. Moody’s forecasts G-20 economies will collectively expand by 2.4% in 2024 and 2.6% in 2025, down from 2.9% in 2023. The G-20 advanced economies will slow from 1.8% in 2023 to 1.5% in 2024 and 1.6% in 2025. The agency estimates growth of the G-20 emerging market countries at 3.8% this year and 3.9% in 2025, after 4.7% in 2023. The only economy likely to contract this year is Argentina (Ca stable).

G3 central banks are on paths to lower and normalise rates, according to the report. Major central banks will begin monetary policy normalisation in due course provided inflation remains on a downward path. Moody’s maintains its expectation that the Fed will lower the federal funds rate by a cumulative 100 basis points in 2024, bringing it to 4.25%-4.50%, and cut further still in 2025. Likewise, it expects the ECB to begin policy normalisation in the second quarter. While the Bank of Japan (BoJ) seeks to normalise monetary policy and move away from negative interest rate policy and yield curve control, softening inflation could delay the process.

The report also finds that macroeconomic risks have subsided compared to last year while geopolitical risks are prominent. Key macroeconomic and financial risks that remain on the radar include inflation, uncertainty about the level of terminal interest rates and pockets of vulnerability within the financial sector. Geopolitical developments continue to pose risks to commodity markets and global trade. The ongoing Russia-Ukraine war, conflicts in the Middle East and tensions across Asia add significant uncertainty to regional and global growth. Domestic economic policies, trade policies and technology transfers will also be shaped by foreign policy.


How the election super cycle will likely ripple through the global economy

Major elections in the US, the euro area, the UK, and dozens of other countries mean that a record share of the world's population will vote this year. As people head to the polls, Goldman Sachs Research finds that, in the runup to election day, government spending tends to increase, central banking policies tend to ease, and economic uncertainty drifts higher. “Elections will therefore be an important, if not the most important, macro story in 2024,” Goldman Sachs economist Joseph Briggs writes in a report by the team. 

Goldman Sachs Research economists’ analysis of more than 1,100 elections in 152 developed and emerging markets suggests that primary fiscal balances as a share of GDP decline by about 0.4 percentage points on average during election years, reflecting both spending increases and revenue declines. The extent of fiscal easing tends to vary depending on a country's level of income, whether it has a democratic system, and whether the majority party has full control of the lawmaking process.

Monetary policy also tends to ease during election years. Across the board, GS economists find that policy rates decline by 20 to 25 basis points more than would be explained by other economic factors. But again, countries with central banks that score higher than average for independence show no statistically significant effect on policy rates, according to the research. This suggests that the Federal Reserve and other developed-market central banks — which generally score as highly independent — are unlikely to adjust policy in response to election considerations.


UK annual house prices see positive growth for first time in over a year

The Nationwide House Price Index for February found that UK house prices rose by 0.7% in February, after taking account of seasonal effects. This improved the annual rate of house price growth to 1.2% in February, from -0.2% the previous month. House prices are now around 3% below the all-time highs recorded in the summer of 2022 after taking account of seasonal effects.

“The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market,” said Robert Gardner, Nationwide's Chief Economist. “Indeed, industry data sources point to a noticeable increase in mortgage applications at the start of the year, while surveyors also reported a rise in new buyer enquiries.”

Despite the news, near-term prospects remain highly uncertain, partly due to ongoing uncertainty about the future path of interest rates.  After falling sharply in late December, swap rates, which underpin fixed rate mortgage pricing, have drifted back up.

“Borrowing costs remain well below the highs recorded last summer but, if the recent upward trend is sustained, it threatens to restrain the pace of any housing market recovery,” added Gardner. “While the squeeze on household budgets is easing, with wage growth now outstripping inflation by a healthy margin, it will take time to make up for the ground lost over the past few years, especially given consumer confidence remains fragile.”


AI Copilot for Finance launched in Microsoft 365

Microsoft is introducing a solution designed to help finance teams reclaim time and stay on top of the critical decisions that can impact business performance. Microsoft Copilot for Finance for Microsoft 365 aims to unlock AI-assisted competencies for financial professionals, right from within productivity applications they use every day. Now available in public preview, Copilot for Finance connects to the organisation’s financial systems, including Dynamics 365 and SAP, to provide role-specific workflow automation, guided actions, and recommendations in Microsoft Outlook, Excel, Microsoft Teams and other Microsoft 365 applications.   

Copilot for Finance provides AI-powered assistance while working in Microsoft 365 applications, making financial processes more streamlined and automated. It can streamline audits by pulling and reconciling data with a prompt, simplify collections by automating communication and payment plans, and accelerate financial reporting by detecting variances. Microsoft says that the potential time and cost savings are substantial, transforming not just how financial professionals work, but how they drive impact within the organisation. 

Users can interact with Copilot for Finance in multiple ways. It both suggests actions in the flow of work, and enables users to ask questions by typing a prompt in natural language. For example, a user can prompt Copilot to “help me understand forecast to actuals variance data.” The tool will generate insights and pull data directly from across the ERP and financial systems, suggesting actions to take and providing a head start by generating contextualised text and attaching relevant files. Like other copilot experiences, users can easily check source data to ensure transparency before using Copilot to take any actions.  


Oracle adds logistics capabilities to drive efficiency in global supply chains

To help organisations increase the efficiency of global supply chains, Oracle is introducing new logistics capabilities within Oracle Fusion Cloud Supply Chain & Manufacturing (SCM). The updates to Oracle Transportation Management and Oracle Global Trade Management, part of Oracle Cloud SCM, are designed to help customers optimise logistics operations by increasing visibility, reducing costs, automating regulatory compliance, and improving decision-making.

Organisations face significant supply chain challenges – from component shortages to disrupted shipping routes, ever-changing global trade agreements, and volatile customer demand. To quickly adapt their supply chains to the changing global business environment, logistics professionals need agile and efficient processes that can help them successfully navigate regulatory compliance, reduce the likelihood of trade bottlenecks, and mitigate the impact of on-going shipping disruptions.

The new capabilities within Oracle Transportation Management and Oracle Global Trade Management include expanded business intelligence capabilities that enable customers to combine transportation and trade data with other operational data in Oracle Fusion Data Intelligence. The augmented data helps organisations improve decision-making and global logistics performance by providing a holistic, real-time view of the business.

Other updates include enhanced logistics network modelling, a new trade incentive programme, an updated Oracle Transportation Management mobile app, and improved workbenches to provide a single view of operations. 


Payer and American Express to accept B2B payments across the Nordics

Payer has announced that it will facilitate American Express payments across the Nordics in Denmark, Finland, Norway, and Sweden. This means that companies using Payer as a B2B digital payments platform can now accept American Express cards as a payment method for all purchases and services.

A Swedish fintech, Payer was born out of the idea of challenging the way businesses operate. Its B2B digital platform is designed to add value across the order to cash process with plug and play solutions to boost digital sales and reduce costs in the CFO’s office. The fintech facilitates customer onboarding with instant risk and credit decisions, in addition to digital payments and checkout solutions. It also offers an accounts receivable automation service with an invoicing solution, enabling American Express card members to pay their invoices with their AmEx card.

“Partnering with payment providers like Payer makes it easier for American Express to be accepted at more locations; this is particularly important in the growing B2B payments space,” stated Keith McDonald, Vice President, Payment Facilitation & Small Merchant Partnerships, American Express. 


Norges Bank excludes three portfolio companies for environmental risk

The Norges Bank Executive Board has decided to exclude three companies - Jardine Matheson Holdings Ltd., Jardine Cycle & Carriage Ltd and PT Astra International Tbk - due to what it finds to be unacceptable risk of the company contributing to or being responsible for severe environmental damage. This is in reference to the conduct-based criterion in the Guidelines for Observation and Exclusion from the Government Pension Fund Global § 4 e. 

PT Astra International Tbk has been under observation since October 2015, but that observation now ends given the exclusion decision. The decisions are based on a recommendation from the Council on Ethics of 12 May 2023.

The Executive Board has not conducted an independent assessment of all aspects of the recommendation but is satisfied that the exclusion criteria have been fulfilled. Before deciding to exclude a company, Norges Bank shall consider whether the use of other measures, including the exercise of ownership rights, may be better suited. The Executive Board concludes that it is not appropriate to use other measures in this case.

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