Is ISO20022 changing the way we manage payments?

ISO20022 is becoming the main global payments standard, with SWIFT messages due to move to this standard in 2022. Banks and financial institutions will be required to adopt the new format to process SWIFT messages by 2025 which will deliver many benefits. With the shift to a new process of exchanging and managing electronic payments, does this mean that ISO20022 will change the way we manage future payments? 

What is ISO20022? 

ISO20022 is designed to be a global standard for the exchange of electronic payment messages between Financial Institutions. SWIFT who are a major payment message provider are targeting an adoption date of the second half of 2022. The aim is that most domestic and other payment systems will implement ISO20022 within 10 years and the expectation is that around 80% of high value payments will be using this format within the next 5 years.

What do these changes mean for transaction screening?

The Financial Action Task Force (FATF) recommends that intermediary financial institutions transmit all information relevant to all counter parties. With ISO20022, the data is better structured and requires specific mandatory data points which means that ISO20022 meets the FATF recommendations.

Structured data makes it easier and quicker to process payments. Also, with structured data, it is more efficient to tune and write rules for transaction screening as certain fields must contain specific data.

Transitioning to ISO20022 and what this means? 

In order to get the benefits that ISO20022 brings there will likely need to be changes to any existing rule sets. Because fields and message structure are changing, any rules that target specific fields will need to be amended to ensure you are gaining the full efficiency benefit that the ISO standard can bring with structured data.

How can Contineo FRS support your business?

New payment formats will mean existing rule sets will likely be ineffective against the new set of data, increasing your alert rate. In addition, Financial Institutions have until 2025 to fully implement the new ISO format on SWIFT, meaning an increased chance that banks will receive both old and new formats of messages. 

With such a complex transition to embark on, most banks will want to ensure they are ready in plenty of time – to iron out any issues and protect against any disruption to their payments processes, and to be in prime position to reap the benefits. Enlisting the help of an expert can often be the most simple option. 

At Contineo FRS,  we are financial crime experts with extensive experience of reviewing existing rule sets and proposing new rules to meet banks’ risk appetite, allowing your processors to focus on alerts that require attention and review. We can help to implement the requirements for SWIFT payments and ensure that your system and rules are aligned to be able to process ISO20022 messages without creating an increased spike in your alert rate. 

Reach out to our team of experts to understand how our tuning and optimisation services can benefit your organisation and aid to streamline and simplify your transition to ISO20022. 

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