Achieving Harmony with ISO 20022
Three days of events focus on Standards in New York
Top executives from global banks and market infrastructures met at SWIFT’s New York offices in May 2016 for the fourth Market Infrastructure Summit. The day’s agenda focused on the execution of the ISO 20022 Harmonisation Charter, i.e. how to turn the Charter best practice principles into an operational reality. Each of the key principles was extensively discussed: sharing information, publishing service information on MyStandards, adhering to market practices, and introducing alignment around message versions and release cycle management.
After some updates on recent evolutions in the financial markets on ISO 20022 adoption such as TARGET2, T2S, high-value payments in the United States, and real-time payments, the discussions focused on SWIFT’s progress and proposals for required approach, tools and processes to really apply this best practice in the field.
The group spent time reviewing progress on global market practice for real-time payments, high value payments (beyond like-for-like) and securities S&R; a lot of attention also went into creating efficiencies on usage message versions and aligning related release cycles and processes. Detailed proposals are now under review by the group, with the aim to approve the approach before the end of the year and to start applying best practice for new projects as from 2017. “The Summit Group and SWIFT are ambitious and have set a demanding agenda to reach agreement on the harmonized processes, as well as the required supporting tools and governance”, said Patrik Neutjens, Director ISO 20022 Programme at SWIFT.
Noting the importance of this initiative for global and regional banks, Isabel Schmidt, Head of Institutional Cash Management, Americas, from Deutsche Bank, was clear on the scope and urgency for harmonisation, commenting: “It brings benefits to the end users, and opportunities for risk reduction. By moving to a single standard, the pool of data becomes consistent, allowing for better analytics which can help with fraud prevention and AML efforts.”
Summit participants also discussed another critical requirement for this initiative to be successful: to make sure all industry stakeholders are involved and committed, including Financial Institutions and their end customers, Market Infrastructures (MIs) and the vendor community. SWIFT has started a global campaign earlier this year to reach out to MIs worldwide, to create further awareness and endorsement for the Harmonisation Charter, especially those who have adoption and/or implementation plans for ISO 20022. The list of supporting and endorsing MIs is expected to grow substantially in the coming months, since endorsing the charter gives these communities access to other MIs and their project experiences as well as best practice approaches for implementation.
The following day users of SWIFT’s MyStandards tool met to hear how their peers are leveraging the solution to help with on-boarding challenges and manage the annual standards release. The day featured numerous testimonials and case studies as well as a ‘sneak peek’ of planned enhancements to the tool. One such enrichment which has already been deployed facilitates harmonisation of ISO 20022 through a new set of features that bring more transparency, in terms of message versions, market practice rules, and release cycles.
On Thursday, ISO 20022 remained the standard of the moment and was the forefront of the agenda at the SWIFT Standards Forum, hosted by Wells Fargo. A record number of delegates gathered to discuss how ISO 20022 is changing the financial landscape, benefits the standard can bring to the industry, including the banks’ own corporate customers. Further focus went to imminent real-time payments projects using ISO 20022 messaging, as well as tools that can help with implementing the new standard.
In talking about how payments are evolving Joanne Strobel, SVP, Head of Technical Sales and Payment Strategy, GFI Payment Services at Wells Fargo noted, “disruption is just another way of saying catalyst for change.
“And changes are coming, with more and more motivations for moving to ISO 20022 such as efficiency, increased information and greater capacity for innovation, it seems we are at a tipping point with adoption of the standard.”
“Harmonisation and ubiquity were definitely the words of the day, being spoken about in practically every session,” said Richard Dzina, Executive Vice President and Wholesale Product Director of the Federal Reserve Bank of New York, “We don't have all the answers yet, but at least the right questions are being asked. A tool that can help is the ISO 20022 Harmonisation Charter.”
Overall, the benefits of ISO 20022 are being seen and the need for the standard is growing. Events such as those facilitated by SWIFT serve as a place to discuss, collaborate, and learn about how standards continue to enhance and shape our world. We look forward to continuing the dialogue at Sibos in Geneva.