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Tuesday, 22 December 2020

What is ISO20022?

 


ISO 20022 is the latest international financial messaging standard to exchange transaction information between the players in the financial ecosystem. With the growth in Internet Protocols and XML this standard was derived to capture the benefits of these new technologies. It was first released in 2004, so it has been around for while and well accepted. Around 200 FIs globally are considering implementing, in addition to market participants like SWIFT, Ripple and Visa to name a few.

 The standard allows users and developers to represent financial business processes and underlying transactions in a formal but syntax-independent notation. The business transaction models can be converted into physical messages in the desired syntax. ISO20022 can be used across various business domains, communication networks, and the infrastructures of financial institutions, clients and suppliers. This flexibility provides many benefits for financial institutions to improve transaction efficiency while reducing costs and exposure to risk.

The benefit of ISO20022 messaging to SME and large enterprises is reducing the effort and difficulty of matching customer payments to invoices, increasing accuracy of cash flow forecasting and better visibility into collections.

Banks that can help customers provide these details around their transactions will provide differentiated services leading to higher revenue generation. In future they can utilize the data gathered from these payment transactions to understand the customer’s business in finer detail and offer predictive insights.

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