Following several delays, the arrival of ISO 20022 is now imminent. On 20 March 2023 SWIFT goes live with the new global standard for cross-border payments and reporting (CBPR+) and starts the period of coexistence.1 The Bank of England (BoE), responsible for CHAPS Real-Time Gross-Settlement System (RTGS) – will migrate to ISO 20022 messaging on 19 June 2023.2 In short, cross-border payments globally, as well as high-value payments in Europe, will migrate to ISO 20022, which unsurprisingly was a key focus at this year’s BAFT forum.
“In 2018, we started a programme of continuous education efforts within the financial institution community to raise awareness, even in markets where the standard was not an immediate priority,” explained Marc Recker, Global Head of Product – Institutional Cash Management, Deutsche Bank.3
This education is set to be a process of continuous collective learning. Recker quipped that “you currently have experienced people in operations who, even if you were to wake them up at 2.00 am, can tell you exactly what an MT109 is – because it has been the standard for around 30 years.
“Today, I do not believe you could find someone with the same level of familiarity with the pacs.009 message,” he added. “Our knowledge of the new standard will develop as we begin to use it – and this will take time”.
“Our knowledge of the new standard will develop as we begin to use it – and this will take time.”
The panelists stressed the SWIFT message that market participants’ priority had to be a successful implementation, with the benefits arising from using rich and structured data functionality following on once this was nailed.
Worryingly, different message versions, market practice roles and business or payment models are emerging across jurisdictions due to local implementation guidelines, they noted. This has meant that the way in which ISO 20022 is being deployed across the globe is itself not harmonised – undercutting the standard’s potential.
The G20 cross-border payments programme aims to provide a solution. The programme is focused on enhancing the speed and transparency of cross-border payments, while also improving access and reducing costs. To achieve these ambitious goals, the project is split across 19 building blocks, with building block 14 looking to tackle the adoption of a harmonised ISO 20022 version for message formats.4
Panelists discussed how, over the past year, a joint task force has been working to develop harmonised user requirements for ISO 20022 in cross-border payments, likely to come into effect at the end of the interoperability period. This currently consists of 15 general requirements related to messaging fundamentals, transparency and the use of structured encoded data, as well as Committee on Payments and Market Infrastructure (CPMI) data models for a core set of ISO 20022 messages used in cross-border payments.
