The global payments industry is changing rapidly as technology and innovation reduce friction and increase the speed at which value moves across borders. In order to keep pace and prepare for the future, the financial community must adopt a common language across the board.

The good news is that this is already happening, as many payment market infrastructures have adopted or are in the process of adopting ISO 20022 as their common standard and data model. To support the financial community in uniting around this shared language, SWIFT is facilitating working groups across financial institutions and market infrastructures to ensure the smooth adoption and implementation of the ISO 20022 standard.

Standards across borders

First, let's take a step back to understand what these standards are and why the time has come for a change.

We can think of standards as the rails that carry financial messages, or payments. In the past, those rails served their purpose with messages designed to be small in size, carrying limited datasets to minimse consumption of expensive mainframe computing resources. With computing and networking bandwith increasingly a ubiquitous commodity, our standards, thereby our language is liberated from technology constraints and free to serve the needs of our clients. The industry needs this richer, structured, quality end-to-end data to support the ongoing evolution of our payments landscape.

Compliance is also a key factor in advocating for a unified and richer standard. Payments move across borders from one jurisdiction to another, processed by intermediary banks and payments systems before reaching end beneficiaries. Disparate standards, regulations, and technologies across the payments chain make financial crime compliance complex and burdensome. A common language, with consistent data elements, labelled correctly and preserved across the chain will significantly improve our ability to identify bad actors and take action.

At their core, standards are a language and as with any language, the less translation each message receives, the better chance there is of preserving its accuracy and intent.

The variety of messaging formats currently used across industries and international markets means that payments frequently have to go through several layers of translation, and often manual intervention, before reaching the end beneficiary. This causes unnecessary friction that is expensive to manage and causes delays in crediting funds to end beneficiaries.

Better data for a better customer experience

ISO 20022 brings a structured, rich, yet flexible format providing the means to preserve crucial data end-to-end. It is fast becoming the most commonly used standard in the financial services landscape. SWIFT and the financial community are working closely together to ensure its successful adoption and implementation.

With every major world reserve currency either now live, or in the process of going live on ISO 20022 within the coming years, and domestic payments systems rapidly adopting the standard, interoperability is increasing significant. And the industry's move to ISO 20022 for FI to FI payments and reporting will complete the puzzle.

The harmonisation, between domestic and international payment rails means that friction will be significantly reduced across the payments value chain.

Reducing friction increases speed and reduces the burden on compliance professionals. Smoother transferrence of data end-to-end means fewer hold-ups as fewer key pieces of information get lost in translation. Smarter rails make for safer, more compliant rails.

To learn more about how SWIFT and the financial community are preparing to reap the benefits of ISO 20022, join us at Sibos 2019 in London.