Where are we on the journey to ISO 20022?

Written by Christian Westerhaus, head of cash products, cash management, corporate bank at Deutsche Bank.

In recent months both the various ISO 20022 migration strategies and their accompanying timelines have been significantly altered – but what do these changes mean for the internal migration strategies of banks and corporates?

Over the next few years, the world’s major market infrastructures (MIs) will each migrate to ISO 20022 – SWIFT’s new global standard for payments messaging. The new standard will lay the foundations for greater payment processing efficiency and interoperability, improved customer experience, streamlined compliance procedures and the capability to deliver new services.

While the destination of the ISO 20022 journey remains fixed, in recent months SWIFT and the MIs have significantly altered the routes they will take and how long it will take them. Amid all this change, where exactly are we on the journey to ISO 20022?

Delayed implementations

At the end of 2019, a number of banks raised concerns with SWIFT about their ability to consume rich ISO 20022 messages by the scheduled November 2021 go-live date. In response, SWIFT announced a revised strategy in March 2020. It proposed a new central Transaction Management Platform (TMP) that, by holding a copy of the complete payment data, will allow rich data to be exchanged from end to end during the co-existence period and beyond. To meet the calls for an extension, and in order to build the new platform, SWIFT decided to postpone the migration in the correspondent banking space by 12 months to November 2022.

As these decisions were being made, the world outside was changing as well, with the Covid-19 pandemic and the ensuing lockdowns placing a strain on resources.

In combination, these factors have since sparked a wave of action from MIs across the world. The ECB was first to react, announcing a decision to delay its T2-T2S consolidation project to November 2022, with EBA CLEARING following suit soon after. In July 2020, the Bank of England also outlined a new approach that will see CHAPS go live with like-for-like messages in Spring 2022 – making it the first major MI to migrate to the new standard.

Over in the US, in May 2020 the Federal Reserve Banks announced they will likely implement fully enhanced ISO 20022 messages through a “big bang” rather than a phased approach, although confirmation and further details are not expected until next year. Progress also continues in Asia; most notably in Thailand, the Philippines and Singapore, as well as Malaysia and Hong Kong, which both recently changed their approaches in response to SWIFT’s decision to delay.

Get ahead with migration

As the various timelines shift and internal resources become strained, it is vital that banks and corporates alike do not begin to view the ISO 20022 migration as just another project to put on the backburner. The delays in the correspondent banking space, and across several MIs, should not be seen as an opportunity for institutions to take their foot off the accelerator. The journey to ISO 20022 is still moving ahead at speed – and internal projects need to reflect this. This is why Deutsche Bank is continuing to advance its front-to-back implementation of ISO 20022, with the aim of becoming a “native ISO 20022 speaker” ahead of the November 2022 migration.

Yet with rapid change comes the challenge of keeping abreast of the latest developments and understanding the key points for consideration. To help navigate this evolving landscape, Deutsche Bank has been an advocate of the migration, notifying its corporate and FI clients of updates and clarifying the effects and implications. This has, in part, been achieved through the release of a series of guides: “ Guide to ISO 20022: Part 1 ” and “ Guide to ISO 20022: Part 2 ” in 2019, with Part 3 launching in late September.

To find out more, please join us for a webinar to launch the new Guide on 1 October 2020 from 11:00 – 12:15 CET with a discussion featuring SWIFT’s Head of Standards, Stephen Lindsay.

Source: Deutsche Bank