With most ISO 20022 implementations underway, the financial landscape is ready to open a new chapter. In the wake of these implementations, the industry has witnessed a sizeable shift, accommodating new developments such as the FedNow instant payment service, Swift’s Global Payments Initiative (GPI), and their implications for corporations.
The path toward the ISO 20022 deadline
An ISO 20022 implementation encompasses more than meeting migration deadlines. However, these deadlines often take center stage within the project. While crucial for banks, adhering to these timelines directly impacts corporate clients.
I recently spoke with Ruchi Bhardwaj, Principal Product Manager at OpenText, to discuss the impact of several proven case studies. Ruchi emphasized that successful ISO 20022 implementations extend far beyond compliance. The real value lies in leveraging ISO 20022 to benefit customers directly. Rushing through the implementation process without a clear vision of how ISO 20022 can enhance customer experiences is a missed opportunity.
Through ISO 20022, banks can offer data-rich solutions such as integrated payables and receivables. These solutions can empower corporate clients to optimize their cash flow management strategies. Beyond process automation, ISO 20022 allows banks to strengthen their partnerships with corporate clients, positioning the bank and its customers for strategic success.
A continued focus on the corporate customer
ISO 20022 migrations remain a top priority for most banks. However, two other significant advancements are also demanding attention. The first is the FedNow instant payment service launch on July 20, 2023. This service introduces a strong new player in the realm of instant payments. Utilizing the power of ISO 20022, FedNow is revolutionizing transaction efficiency through real-time capabilities, transforming the speed and experience of financial transfers.
Swift is also experiencing a resurgence, particularly with the introduction of its Global Payments Initiative (GPI). Traditionally known for its interbank messaging system, Swift has embarked on a journey to empower banks to elevate cross-border payment processes for their clients. This initiative redefines Swift’s position and allows banks to enhance cross-border payment processes for their clients. This transformative development not only elevates client engagement but also serves as a catalyst for innovation, creating new opportunities for growth and collaboration for banks and financial institutions.
With ISO 20022, FedNow, and Swift’s GPI, the financial industry is focused on streamlining processes and driving simplicity in payments.
How should banks prioritize?
These developments are new and undeniably exciting. However, banks must also remain focused on the ISO 20022 migration deadlines. Banks can start this process by creating an overview of the planned initiatives they expect to deliver in the upcoming years. They can also draft their priorities to ensure internal alignment and accurately track project status. To help with this, OpenText has provided a draft priority list.
OpenText ISO 20022 Priorities List
Priority #1: ISO 20022 compliance
What to Prioritize: Banks must prioritize ISO 20022 compliance. This entails meeting the migration deadlines and ensuring the necessary systems and processes are in place to handle the new standard.
Why it’s Prioritized: ISO 20022 compliance is a top priority as it forms the foundation for banks to build all other innovations and initiatives. It provides the industry with a common language for data exchange, facilitating interoperability and collaboration. With this foundation, banks can fully leverage subsequent advancements. Additionally, it is crucial to remain aware of migration deadlines. Here are a few critical dates for reference: CHIPS deadline in April 2024, Fedwire’s deadline in March 2025, and Swift’s deadline in November 2025.
How to Prioritize: ISO 20022 compliance should be at the forefront of banks’ efforts, as it serves as the foundational requirement for seamless operations in the post-ISO 20022 era. Banks should allocate dedicated resources to meet these deadlines efficiently.
Priority #2: Customer-centric innovation
What to Prioritize: Once banks ensure ISO 20022 compliance, they should prioritize customer-centric innovation. This involves leveraging ISO 20022 to directly benefit customers through data-rich solutions like integrated payables and receivables.
Why it’s Prioritized: Customer-centric innovation is essential as it differentiates banks in a competitive market and strengthens customer relationships. By offering data-rich services, banks empower corporate clients to optimize cash flow management. This positions banks and their customers for strategic success.
How to Prioritize: Banks should approach ISO 20022 implementation with a clear vision of how it can enhance customer experiences. This requires careful planning. To ensure success, banks must engage cross-functional teams, work with strategic industry partners, and provide technology equipped for the new standard.
Priority #3: Swift adaptation to industry developments
What to Prioritize: Banks should monitor industry developments such as the FedNow instant payment service and Swift’s GPI. They must also prepare to adapt when these new initiatives offer strategic value.
Why it’s Prioritized: This industry is incredibly dynamic, and rapid adaptation to new opportunities ensures that banks remain competitive and relevant. Initiatives like FedNow and GPI offer transformative capabilities that banks can harness to gain a competitive edge.
How to Prioritize: Stay agile responsive, and keep a close eye on emerging industry trends. When new opportunities arise, allocate resources and talent to assess and integrate these developments into existing infrastructure. This may involve collaboration with industry partners or significant strategic investments.
Prioritizing ISO 20022 compliance serves as the foundation for ongoing innovations and will consistently remain a top priority. After the successful migration, banks should focus on creating customer-centric solutions. These soluctions can enhance client relationships and establish market differentiation in a competitive landscape. Lastly, banks must maintain agility and adaptability to respond to industry developments swiftly, seizing strategic opportunities as they emerge. This approach ensures banks meet regulatory obligations and capitalize on new industry developments.
What about corporate implementation?
Banks play a pivotal role in guiding their corporate clients through the benefits of ISO 20022 adoption. Banks can provide invaluable support as trusted financial partners by offering expertise, resources, and tailored solutions. This guidance may include training and educational programs to ensure corporate clients’ teams are well-versed in the new ISO 20022-compliant use cases and technologies.
Through proactive communication, dedicated support, and a deep understanding of their client’s financial goals, banks can foster an environment that empowers corporate clients to navigate ISO 20022 migrations successfully and extract maximum value from this transformative shift in the financial ecosystem.
ISO 20022 as a strategic enabler
Even though many banks and financial institutions are laser-focused on meeting the ISO 20022 deadline of November 2025, it’s important to remember that the journey will continue. Instead, it provides an opportunity for an acceleration in strategy, allowing organizations to move past implementation efforts to value-added initiatives that pass the value of ISO 20022 to their corporate clients. This post-deadline phase opens the door for innovation and market differentiation for those ready to see ISO 20022 as a strategic enabler.
An Uncharted Landscape
The collaboration between ISO 20022, Swift, and initiatives like FedNow creates an environment where efficiency, speed, and empowerment unite, benefiting both banks and their corporate clients. ISO 20022 has proven to be a catalyst, compelling financial institutions to redefine approaches. It has encouraged them to be proactive, innovative, and customer-centric.
To learn more about ISO 20022, check in with what we are doing here at OpenText.