CSM Opportunity for Banks

 Given the huge innovation in payment initiation  for consumers its only a matter of time that businesses would ask banks what options are available for them to participate in the instant payment world.Its not going to be easy for banks. They will have to take calls that may or may not pan out. One area they can start thinking about is the Clearing and Settlement function. There is a history of lag and costs in this area. However there is sporadic innovation as well. Ripple's cross border RippleNet system has shown the potential for reducing...

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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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Cost and Value in Payments

 Today cross border payments have a reputation for high cost and lack of transparency in the fee structure.Coupled with a 600 year old system of Vostro/Nostro accounts and Correspondent banks as middlemen the system is opaque as best and takes 5-7 days for settlement to conclude.Where are these costs coming from? This graphic from Payments Canada will help.Can fintechs help reduce costs? See this graphic from RBC in one of their pilot studies...

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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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Case for ISO20022 migration

  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...

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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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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...

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