Its not about a technical specification and the fact that a
lot of data travels with the payment in ISO20022.In making a business case for
migrating to ISO20022, its very hard to sell to executives why a change of this
magnitude is desirable. I collected a couple of data points both for the bank
and its customer to showcase why this migration is desirable.
For Bank:
Banks have a very complex legacy architecture that has
served them well for most part. However, the cost of servicing failed STP
payment transactions is becoming prohibitive.
In Singapore for example a 60% STP rate is the norm. What is
the norm for your bank? Is it acceptable? Factor in costs for false positives in sanctions
screening. The business case can be built around these two cost factors as a
starting point.
For Customer:
An Insurance company for example can expect 400 invoices to
be paid in 10 payments. If the bank can provide enriched data about these
invoices and payments the reconciliation effort is substantially reduced. The
reporting around this information can be built into the value proposition.
What if the bank does nothing?
Over time the legacy infrastructure burden will render the
bank unable to compete even if there is time available to migrate to ISO20022.
The bank may have to start somewhere, perhaps look at message translation
options as a starting point.
The way to build the business case will be in terms of
operational costs, customer servicing and mandate timelines coming from bodies
like SWIFT and country specific modernization deadlines.
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