Banks need to get the message on ISO 20022
Many banks are taking a relaxed approach to the migration of payment systems to the new messaging standard.
Banks are coming under competitive pressure to move to the new universal financial messaging standard ISO 20022 as the overall shift in the payment industry to instant payments means that existing products and services could become inoperable if they don’t act.
In Europe, Chaps will be the first to migrate to the new messaging standard in June 2022, followed by Target2 in November. In Canada, the Lynx system will also migrate in November 2022, as will Swift correspondent banking, albeit with a coexistence period.
Fedwire and Chips in the US are expected to move over in 2023.
A recent Bottomline report, ‘The Future of Competitive Advantage in Banking & Payments’, shows, however, that most banks and financial institutions seem be leaving their preparations to the last minute. Almost 60% of those surveyed had either not started planning, just started planning, or were still looking for information on how to move forward.
Some banks already support ISO 20022 for corporate payment and account statements services. But if they do not, process changes are required to transform internal processes to be interoperable with future market infrastructure International Organization for Standardization requirements.
“Financial institutions can do what their corporate customers want them to do and use ISO standards to streamline all processes and enable the sharing of rich remittance information,” says Paul Thomalla, global head of payments at Finastra.