Discover how you can use ISO 20022 to deliver benefits for your customers, while creating new value propositions and protecting or growing your market share.
The situation today
Tens of millions of international corporate payments are already sent via the Swift network. With ISO 20022, financial institutions have an opportunity to help their corporate clients achieve their cash and treasury management goals by reducing friction and streamlining reconciliation.
But although ISO 20022 is available for corporate use – such as the payment initiation message pain.001 – the deployment of ISO 20022 messages for corporates is currently inconsistent. As a result, resources are needed to adapt to different providers’ specifications.
Other challenges include:
- Delays due to investigations – According to a world-leading food company, up to 1% of initiated payments are subject to investigations by the bank due to financial crime compliance or beneficiary account checks. The resulting investigations can take up to two weeks to resolve, which can damage suppliers’ production lifecycle.
- Manual reconciliation – Remittance information in payment messages is often truncated when relayed by financial institutions. As a result, a South Korean conglomerate reports that as many as 10-15% of payments must be reconciled manually.
The opportunity with ISO 20022
ISO 20022 offers several tangible benefits for corporates:
- Improved reconciliation – By using structured remittance information, corporate finance and treasury teams can accelerate the reconciliation of payments and release goods earlier.
- Working capital improvements – Corporate finance and treasury teams can use richer and structured data to forecast their future inbound and outbound payment flows. This, in turn, enables companies to make better use of the funds available to them.
- Support On Behalf Of (OBO) payments – The current MT structure is not designed to efficiently support OBO payments, which have become very common in recent years. ISO 20022 messages have dedicated, structured fields to support the identification of parties, including ultimate debtor/creditor and initiating party. Corporates can take advantage of these fields to set up virtual account services.
Reduce payments friction, streamline reconciliation, increase the accuracy of cash flow forecasting, and improve working capital.