Global payment market infrastructures are mandating the use of ISO 20022, and as a result, ISO 20022 will be the new language of Payments. This will impact all aspects of the payment value chain, and in particular legacy applications. Fortunately, there are native software solutions which can help banks address the challenges of complex ISO 20022 platform modernization. These solutions can be implemented quickly and non-invasively to achieve both tactical compliance and strategic value without significant impact to existing core payment processes.

As ISO 20022 migration deadlines draw nearer, with the first wave of deadlines scheduled for end of 2021 and additional regulations coming soon after, many banks and financial institutions have begun implementing strategies to comply with the industry mandate. But investing valuable resources into mere compliance is unlikely to deliver the desired strategic benefits; banks should take advantage of the opportunity to generate commercial value from their ISO 20022 migration strategies. 

A recent example of a bank working to optimize its ISO 20022 strategy is Citi, which recently announced that it will be implementing Volante’s VolPay for ISO 20022 migration as a unified solution to address the complexities of ISO 20022 payments modernization.

Payments, a segment that has not seen drastic changes for decades, is currently undergoing unprecedented technological and regulatory transformation. To remain competitive in an industry in the middle of a metamorphosis, banks should incorporate the following components into their ISO 20022 strategy to ensure that their efforts create business value:

1. Better Data & Analytics 

The ISO 20022 enriched format will allow more comprehensive data to travel with financial messages. But capturing data, while an important first step, is only the beginning. Being able to extract meaningful information about customer habits and trends from that raw data is what will differentiate banks’ data analytics capabilities from their competitors. Gleaning meaningful insight from big data is the way of the future, and banks have known this for some time; in a survey done by McKinsey in 2020 on payments, “95 percent of respondents say they will invest more in digital and analytics to ensure clients get a better, more tailored, and more seamless service.”

2. Better Customer Experience 

Having more data on habits and trends curtesy of ISO 20022 will give banks insight into the needs and pain points of their customers, resulting in banks building customized value-added services that increase revenue and improve customer retention. This is a crucial piece of the banking puzzle. While customer expectations are continuously changing, generally they’re beginning to expect (demand, really) a seamless banking experience and the ability to manage their funds via omnichannel methods, in real time. 

3. Digital Transformation Enablement 

Banks and FIs need to take major steps in order to prepare their infrastructure and personnel for the inevitable ISO migration, and these changes can also serve as a technological segue into more sophisticated digital transformation that extends beyond ISO 20022. Changes implemented can be leveraged to also set banks up for real-time payments (RTP) and open banking capabilities via APIs, furthering an institution’s ability to operate in a modern, open financial environment.  

The shift to ISO 20022 messaging is huge; an outdated, inefficient way of conveying transaction data is being overhauled, opening up the opportunity for banks to update or replace the infrastructure and systems that support payments messaging so that benefits extend beyond compliance.