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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