What Financial Institutions Need to Know About ISO 20022
Over the past few years, financial institutions have been moving toward more rather than less regulation. For consumers, this is a boon that can help provide a greater sense of security and accountability. For banks, payment processors and other industry players, this shift represents a new area of knowledge that they will need to master in order to remain compliant and competitive.
One such example involves the push toward standardizing and automating payment messaging standards. Financial institutions that rely on SWIFT MT payments may be aware of previous limitations, including less-than-flexible messaging standards and manual validations that can hold up transaction processing and introduce an element of human error. Migrating payments to the ISO 20022 standard has been proposed as a remedy for these ailments.
Stated benefits of the transition include a wide variety of supported instruments, such as mutual and hedge funds, pensions, and money market accounts, as well as enhanced ease of international transactions. The potential downsides are discussed in a helpful article by JP Morgan’s Head of Global Clearing and FX Payments, Matt Loos. Loos encourages financial institutions to form a united front in supporting the migration, cautioning that waiting too long may result in government-imposed regulations rather than industry-chosen ones.
Learn more about migrating payments to the ISO 20022 standard by visiting SWIFT’s overview, which includes basic information, as well as a more in-depth white paper. Individuals interested in attending the “ISO 20022 for Funds in 90 Minutes” webinar can register here.