Why should banks care about ISO20022?

 Consider some of this data:-Total transition costs for migration to ISO 20022 payment message standard cost the SEPA $9 billion as per a 2017 study.-Payments Canada expects a migration from checks will save the Canadian economy $4.5 billion.This is good for the economy and society as a whole but I am a bank running for profit so why should I care? I have a system that works fine, the inefficiencies and delays in my current system is to my benefit...

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The Data Management Challenge

 Data data everywhere , not a bit to use  can become a familiar story in banks as our sources of data such as ISO20022 information , internet of things (IoT) with every edge device capable of a payment transaction and scads of video, biometric  and other unstructured data. Banks have done a good job of gathering all this data but very few know where it is or how to use it.Here are the issues:-Keeping up with storage and use for consumption by analysts and data scientists.-Why is the data being collected ? Few know why and how it...

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Customer minutes and friction as a metric for Banks

 Everywhere we see especially in ecommerce what used to be complicated method of paying for goods and if required getting refunds used to be fraught process. Nowadays Amazon has shown the way with One click ordering and refunds.This consumer focus to help make their lives easier while interacting with a machine has been rewarded both by customers and the stock markets . What are some examples where banks have made the difference?- Transaction alerts on the mobile app -Customer authentication on the phone if calling from a registered number-Servicing...

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Banks cede innovation in Retail Payments

 We have seen the great uptick in new methods of payment initiation by the customer. Examples of these are:-QR Codes-Request to Pay-Pay by mobile phone and other devices using Google or Apple Pay-Buy now Pay Later or Installment Pay.-EMT or email money transferAll these new services are can be grouped as Alternative Payment Methods (APMs). These services are possible by layering an Alias Directory on top of the payer, payer's bank, the network, the payee's bank and the payee. Overlay services delivered via the alias directory improve customer...

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What is LEI?

 LEI stands for Legal Entity Identifier . This is a 20 character alpha numeric code based on ISO 17442 standard. This code helps in identifying the legal entities in a payment transaction. For example in Canada all counterparties to the derivatives transactions need to have an LEI. As faster payments and pay mod initiatives kick  in, more market participants including legal companies, their subsidiaries, government departments, charities...

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The Age of Open Banking

 Let us pivot for a moment from the back office of ISO20022 payment messages to the front office where the customer meets the bank.  Imagine your legacy bank has worked hard to modernize its payment systems and now carries rich data about a transaction end to end.What challenges do banks face? Several in fact. Sharing Customer Data: Who do I share this data with?  What is the risk to the bank, the customer? How is my API strategy shaping up?  Regulations are spotty at best and cant be depended to course correct us.Partner:...

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How to use data from ISO20022?

    The attraction of ISO20022 messaging data is: -It is unambiguous: the meaning of each data element is known -It is credible: the origin point of the data is known. -It is consistent: all ISO messages follow a standard that is universally understood.   These factors lend itself to data analytics at scale. Many banks have data lakes and initiatives to use AI/ML to develop insights. The building blocks are in place. What is payments data? Data generated by providing payment services such as card payments, mobile payments,...

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Brief on ISO20022 CAMT Reporting

    Under the ISO20022 payment messages for credit transfers, direct debits and electronic payments will all need to use the same standards, languages, procedure, and format to be compatible. The new format is called CAMT for Cash Management. CAMT ensures the customer a continuous XML process from submission through to the account statement with no disruption and specifically covers Bank to Customer Cash Management reporting The three most relevant CAMT formats for payment processes are listed below: camt.052 – Electronic...

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ISO20222 and Straight through processing (STP)

The main benefit of ISO20022 rests on the fact that it will allow higher STP throughput. Let’s peel this onion a little bit. What we know: -The ISO 20022 standard defines a methodology for the development of financial message standards. - It relies on UML3 (Unified Modeling Language) models representing financial business processes, flows and transactions in a neutral notation. -These business transaction models are then subsequently converted into physical messages in the desired syntax, like XML (eXtensible Mark-up Language). - ISO 20022...

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Compliance a Concern for Banks migrating to ISO20022

As ISO 20022 becomes more prevalent as a message standard of choice, banks are wrestling with the compliance risks that come with implementing this standard. For the last 40 years a name and address in Swift MT consisted of 4 lines of 35 characters each. MT focused on concise information as opposed to clarity since it was developed in the days of low bandwidth and leased data lines were every expensive. In addition, over the last few years there has been the requirement of AML screening against sanctions lists and enhanced KYC including more...

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Understanding ISO20022 Message Types

  So what is the fuss all about? Currently the transaction related information is sent in legacy formats (e.g. SWIFT MT) and that is expected to change with the use of ISO20022. Let us look at the different message formats and where they are used in ISO20022. These formats will cover debit, credit, mandates, settlement, investigations and statements to name the key ones. In ISO 20022’s naming scheme, message type is described with four letters...

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