By Rewan Tremethick, Content Manager.
SWIFT has big plans for the future of payments. The move to ISO 20022 will unlock a new world of richer data, enhancing straight-through-processing, speeding up payments, and opening up new market segments for banks.
Managing your data effectively will be key to unlocking this smarter, faster world. While ISO 20022 provides an obvious incentive to do so, the impact of adopting new intelligent data integrity tools will drive efficiencies in many other areas.
Bring the structure, leave the recs
SWIFT ISO 20022 gives the industry an opportunity to move back to a standardised way of doing things, allowing companies to ditch the reconciliations, cut costs, and enhance straight-through-processing.
Many organisations currently have data that isn’t compatible with the structured field options within MT. Because they lack the capability to easily convert the format, they are using unstructured field options. This has caused a proliferation of nonstandard data and created friction in the global payments ecosystem.
According to a recent blog post by SWIFT, better payments are being held back by unstructured data. Ordering and beneficiary data is a prime example. Options 50F and 59F were introduced to standardise party identifiers and name/address details, but the industry has been slow to adopt them. In fact, SWIFT banking traffic data between 2017-18 shows that unstructured field options were used 85-94% of the time.
The use of unstructured data means you’re sinking time and money into reconciliations to normalise your data and fulfil reporting requirements. Thanks to ISO 20022, these resources will be freed up for use in driving operational efficiencies elsewhere rather than solving problems caused by inadequate systems.
Data integrity is the key to frictionless payments
Around 10% of international payments are getting held up somewhere in the process. Imagine the impact of improved straight-through-processing if this rate could be cut.
While ISO 20022 has multiplied the amount of data banks are required to send each other, this only presents a challenge if the technology fails to keep up with the pace of change.
The solutions to this problem already exist. Intelligent SaaS data integrity platforms are built to be flexible, and the cloud provides unparalleled scalability.
The new standard is a big step forward for the payments industry and presents an opportunity to adopt a better way of working that goes beyond just payments. You can implement changes to handle the challenges in front of you, while also equipping the back office with the tools it needs to be more flexible and agile going forward.
A flexible data integrity solution like Duco can help with multiple data challenges. This has many long-term benefits compared to fixes that only focus on the requirements of ISO 20022.
Covid-19 created a climate for change – it’s time to follow through
The industry is in a good position to adapt to the challenges of the new SWIFT standards. CIOs are already reporting big changes in their organisations.
Covid-19, while presenting many challenges, also helped push the banking industry to embrace the advantages offered by technology. Keeping up the pace is key here, as banks that commit to further transformation will be ready not only for ISO 20022, but will also futureproof themselves against further industry change.
The industry is expecting to see more transformation next year. In Gartner’s CIO Agenda 2021 58% of CIOs ranked business intelligence and data analytics as one of their top priorities for 2021. Cloud services and solutions following closely at 53%.
The Harvey Nash / KPMG CIO Survey 2020 found that technology spend increased at a record rate this year. Given that CIOs saw a 5% median increase in IT spend, it’s impressive that 43% expect to see their budgets increase again in 2021.
In addition, 47% say Covid-19 has accelerated digital transformation – largely thanks to the shift to remote working. 53% have increased their use of the cloud and 35% see this and other infrastructure projects as their top priority going forward.
Larger budgets and a renewed focus on the cloud aligns perfectly with the requirements and opportunities for better data under SWIFT’s ISO 20022. A renewed focus on data integrity can actually free up IT resources, as the next generation of SaaS solutions do away with the need for time-consuming installation and data transformation projects and hardware investment.
Embrace the new standards with the help of intelligent tools
SWIFT’s ISO 20022 goals rely on the idea of a single data truth. The organisation is looking to push universal cooperation even further.
As Serge Munten, Chairperson at NMG Luxembourg (ALMUS) noted, ‘with mutualisation tools like the SWIFT platform, we have the opportunity to create cost efficient banks with frictionless infrastructure.’
Banks that seize the day and adopt intelligent technologies can be at the forefront of SWIFT’s new initiatives. Agile SaaS platforms powered by machine learning have a key role to play. By adopting these solutions your organisation will benefit the most in a world of frictionless payments and richer data.