Next year rich payment data will start to become the standard language of global payments. Projects are well underway, and the vision we all share is coming into ever-sharper focus. Improvements in the quality and richness of data in domestic and cross-border payments will reduce manual interventions and costs, improve automation and speed of settlement, mitigate risks of financial crime compliance, and enable a new wave of innovation.
This is the third edition of “ISO 20022 in bytes” a publication sharing best practices and insights from practitioners and partners in their journey to better data and better payments.
The Philippines: A community in transformation
There is a strong regional momentum for the adoption of ISO 20022 led by the ASEAN central banks. With Brunei already live, the Philippines, Singapore, Thailand and Malaysia communities are now in project mode for a live date ahead of the CBPR+ live date in November 2022.
Hear more from Isabelita Papa, Bankers Association of Philippines, Task Force for ISO 20022 Adoption Co-Chair and Rolin Castro, Bank of the Philippine Islands and SWIFT National Member Group Chair for Philippines.
The Philippines banking community is undergoing a major transformation to its digital infrastructure. Led by the Bangko Sentral ng Pilipinas (BSP), the transformation programme will replace the domestic payment and settlement system and in doing so will establish ISO 20022 as the standard language of Philippine financial transactions.
At the epicentre of the new infrastructure is PhilPaSS, the new Real-Time Gross Settlement (RTGS) system that is set to go live for bank-to-bank settlements in June this year. There are 176 participants in PhilPaSS Plus including commercial, savings and rural banks.
The ISO 20022 roadmap in the Philippines is set according to the BSP digital transformation programme that will radiate to all domestic payments.
Collaboration across the community has been critical to the success of the programme. From the initial blueprint for the programme from the BSP, the community has seen the creation of the Taskforce (a panel of experts in handling the ISO 20022 messages) mandated to rally industry consensus on market practices for the scheme operators. This stream of work, which included SWIFT standards experts, delivered the mapping rules and rulebook for domestic ISO 20022 exchanges, based on the HVPS+ template. The rulebook (available on MyStandards), covering payments and rejects, will continue to evolve, with a new version expected later this year.
Apart from the BSP and the Taskforce, the Payments Market Practice Group (PMPG) and Securities Market Practice Group (SMPG) have established themselves in the Philippines. Both groups are involved in the planning of the rollout of ISO 20022 for the community.
Reaping the benefits
The economic benefits of the transformation are clear. Standardisation and interoperability are improving within the community, and especially between Philippine institutions and their international business partners, so commercial activity can increase in volume and value.
The community’s vision extends to the full range of domestic and international domains, across payments, securities, foreign exchange and trade – but it is also true that the ISO 20022 transformation is demand led.
Correspondent banks, regulators and customers require better, smarter data throughout the payments chain. This includes better data such as more structured key party identification and descriptions; smarter data such as full remittance and purpose information and true end-to-end persistence of all this extra payload. Ultimately end users can benefit from it, at least as much as the banks.
Better structure in risk-bearing data is a clear benefit of ISO 20022 – it enables better analytics, filtering, screening, and validation of key elements within each transaction. But of course, this does not come free. The Philippines shares the significant implementation challenge of moving from unstructured to structured data with the rest of the world. The country-wide digital transformation programme helps, in that the move to structured data across domestic and cross-border channels firmly puts this challenge high on the executive agenda – but there is no easy path to implementation. The community greatly appreciates the work done by organisations such as the PMPG in publishing detailed analysis of how this challenge can be tackled. It looks forward to further discussions about how and, more importantly when, the transition from unstructured data to structured data can be managed on a global basis.
A vision for the future
For now, the initial focus of the Philippine community is on its domestic transformation programme. Live implementation of PhilPaSS Plus is in June 2021. Some regional bank operations will be going live via the PhilPass Plus browser as a manual transaction entry and management portal – there are three other payments channels for PhilPass Plus. Testing is underway across all channels, and following completion of UAT on 10 February, the BSP will be able to confirm the adoption timeline. The BSP has maintained contact with each bank involved through a nominated coordinator at each institution, who is responsible for keeping the BSP informed of progress and achievement of key testing milestones. The rulebook ensures that all participants share the same vision of how ISO 20022 payments will work. BSP has its own readiness portal, which enables banks to exercise their ability to conform to rulebook flows, even ahead of the UAT.
BSP timelines have been stable and resolute throughout the programme – and its vision has been adopted by the whole community. The ISO 20022 programme for cross-border payments co-ordinated by SWIFT will enable the investments made by the Philippine community to reinforce the strong relationships it enjoys with the rest of the world, for mutual benefits of efficiency, innovation and security.
CBPR+ on FINplus pilot service
CBPR+ message definitions were added to the FINPlus Pilot Future service at the end of November 2020 and already we are seeing some testing activity. Some 36% of the top 200 banks are engaged in static testing, 15% have ordered their FINPlus connectivity and some are already exchanging CBPR+ messages.
Reminder: a consistency check of sender identification in the technical and application headers will be implemented in March 2021 for the pilot service, and May 2021 for the live service.
More information can be found in the FINplus service description, and the Network Validation Rules for ISO 20022 (02 October 2020).
What else is new?
There are new resources for you on the ISO 20022 Hub within the Knowledge Centre on swift.com, to help you plan the next two years of activity.
This shows you what major pieces of documentation have been published – and what will be published in the future – covering the major initiatives underway within cross-border payments. There are sections on CBPR+, FINPlus, transaction management, vendors, and SWIFT gpi. As each document is published, the link to it becomes active from the Roadmap, so it serves as a useful resource to see not only what is coming, but what is already available.
The collection of ISO 20022 Adoption Briefings continues to grow and the latest briefing is on FINPlus. There will be more published this year – focussing on testing and other key areas; essential listening for anyone involved in ISO 20022 transition projects.
SWIFTSmart courses on CBPR+ messages
A new range of courses on CBPR+ messages and associated use cases is now available on SWIFTSmart. These are based on the popular CBPR+ User Handbook published on MyStandards. Within MyStandards you can also find also a catalogue of sample messages enabling you to see how the common use cases and business scenarios work in detail.
As part of SWIFT’s Community Update taking place in February, Franck Depraetere, Manager of the ISO 20022 Programme in Asia Pacific, is speaking at a session entitled “Leading implementation practices in ISO 20022 adoption.” He is joined by Julie Bolan, Director, Payments Markets, Oceania at SWIFT, alongside customers from SBI and the Australian Payments Network. The session takes place on February 3rd.You can find it here, as part of day 2 of the Update.
Update from CBPR+ working group
The CBPR+ working group priorities for 2021 will be to on-board Change Requests to existing Usage Guidelines (UGs), leading to an updated collection to be published by end of March. Definition of new UGs for relaying corporate payments (pain.001/002) and payment cancellation will also be published this quarter.
Update from the regions
In Asia Pacific, the last quarter had a community engagement focus. ISO webinars provided an update on ISO migration timelines; the coexistence measures that will be supported by the enhanced platform’s transaction management capabilities; the scope of CBPR+ messages and the most recent information resources.
With 11 webinars, community engagement and central bank event sponsored, we have reached out to more than 1,000 delegates. This has led to 85% of our regional community now being aware or in project mode for the ISO programme.
Domestic adoption is also high on the agenda of many payment system operators. SWIFT continues to proactively engage with large economies, including Korea and Indonesia, to foster adoption of ISO for domestic payment systems.
In the Americas and in EMEA, over the last month we have been actively engaging with key intermediaries and vendors across the regions, to provide updates about the ISO adoption approach and timeline. In Europe, we are also about to initiate a multi-lingual mailing campaign to spread awareness about the adoption of CBPR+ to the rest of the EMEA banking community.
In Q2 2021 we will provide more information about the technical and testing aspects of the ISO 20022 migration.
Contact us at firstname.lastname@example.org, or your local contacts at:
- Asia Pacific – Connie.MA@swift.com or Franck.DEPRAETERE@swift.com
- Europe – Gregory.MESTDAG@swift.com
- Americas and UK – Marcos.CAMERON@swift.com