Liz with ISO 20022

I will always feel a bit of affection, love even, for ISO 20022 – the humble standard, understood by but a small group of people globally, that acts as a crucial ingredient for the future of international commerce and trade. 

As a journalist it is important to understand who your audience is and what they need to know. If you write about food, for example, the average consumer will never be interested in how the sausage is made (in fact it may turn them off). These readers want to know how it tastes, or who sells the best quality and best value sausages. However, if your audience are the farmers who raise livestock, or the butchers who prepare the meat, how that sausage is made is very interesting indeed. 

My instinct is to continue hammering home this metaphor about the difference between focusing on the delicious addition to your weekend breakfast and examining the sometimes tedious, often disjointed process of its creation and delivery, but it’s making me hungry.   

Some think it isn’t sexy to write about slight changes in regulations, the slow roll-out of global standards and the often fragmented, sometimes collaborative way global banks create efficiencies and improve processes. But true innovation only appears after years of hard work on tedious and mundane details. Sexy is the result of a lot of moving parts. (There is a bit of functional magic in that.)

I was first introduced to ISO 20022 in 2010 when the European Commission (EC) set out its proposals for EU-wide end dates for the migration of national credit transfers and direct debits to Single Euro Payments Area (Sepa) instruments. The use of ISO 20022 in the journey of Sepa resulted in a myriad of working groups, panel discussions and, at least one heated debate, with raised voices, regarding the use of conversion tools (I’m serious).

For those who need context, 20022 is an ISO standard for electronic data interchange between financial institutions, first developed in 2004 and replacing ISO 15022. ISO is the International Organization for Standardization, which provides standards for everything from light bulbs to financial messaging. The 20022 flavour was based on XML (a mark-up language) and introduced a new data field for back-office processes. 

It was that extra data field that fuelled the prevalence of conversion tools, during the Sepa migration, for those who didn’t have the time or resources needed to revamp the structure of how these messages were received in time to meet the EC deadlines. There were some in Europe that viewed those tools as an unnecessary shortcut that undermined the work most banks were doing to usher in the Sepa era. 

Emotions ran high. Event panels were produced. Column inches dominated print and online news, blogs posts and features – all devoted to a messaging standard that allowed additional information about a payment to be transferred as it made its way through a financial services rail. 

ISO 20022 is not new to Sibos. (I felt the need to take a selfie a few years ago when I wandered through a giant booth devoted to the payments industry’s favourite ISO standard – see above.) However, with the start date for migration to ISO 20022 for cross-border payments set by Swift for this November, discussions will continue to dominate this year’s show. 

Again, for those of us not working in the factory for international payments, the next few years will see global banks migrate from legacy Swift MT financial messaging to the highly structured and data-rich ISO 20022 standard. The flexible framework provides an internationally agreed business message syntax and semantics. User communities and message developers will use the same message structure, form, and meaning to relay financial transaction information worldwide. 

Not for nothing many are calling the ISO 20022 migration for international payments the biggest impact on the market since… well, Sepa. 

The average person on the street, interacting with businesses and making payments, wouldn’t be able to tell you the difference between ISO 20022 and ISO 20086 (that’s the standard for light bulbs, by the way). Their interest isn’t how payments are made, but what they can do and whether they happen at all. 

A wise person once said: "Tools are not innovative; it’s what we do with those tools that’s innovative." I’ve been to a lot of conferences in 28 years. This week at Sibos we’ll watch, discuss and debate how we as an industry make payments happen. 

And for that I will always feel a bit of affection, love even, for ISO 20022 – the humble standard, understood by but a small group of people globally, that acts as a crucial ingredient for the future of international commerce and trade. 

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