ISO20022. It has been on the radar for a long time. When I moved to London in 2006 to start working in treasury operations, one of the first projects I spent time on was a mapping document from SWIFT MT to MX messages. Despite some notable earlier movers, it has taken the wider industry a bit longer than I expected to make the switch, but we are certainly past the tipping point now. With numerous payment schemes already using messages from the ISO20022 catalogue, and more transitioning in the coming years, it may appear that there is value in banks making their core systems ISO native also. Surely that's the best way to align with the external schemes and get the most value out of the new messages?
Well, in short, no.
For starters, not everything has moved to the ISO20022 standard yet. So what do you do - migrate your core platform to ISO now but use some middleware to give backwards compatibility? Or delay your core upgrade until enough schemes have migrated, knowing that this could extend out for years?
Let's take the case of a bank which only needs the SEPA payment schemes (all already using ISO20022 standard message types). You've deployed an ISO native core, you've built/bought an ISO compliant gateway. You're all done, right?
Every year, you'll need to stand up a project team to assess the 'updated' message standards and ensure all your infrastructure is compliant. Maybe you don't need to make a change every year, but you do need to spend resources to get to that conclusion. Maybe only the gateway needs to be updated, but then you'll be drifting away from the original alignment with the core. Your gateway software provider might manage the change for you (for a fee no doubt), and then charge you again when your version of the software is no longer supported.
Start adding more payment schemes across multiple geographies, some ISO 20022 compliant and some not, and the nirvana of end-to-end format alignment rapidly disappears. Add to this the cost of managing the tech to connect to each scheme, some of which will need to be onshore in countries you may not want to have a physical presence in, and your simplified solution doesn't look all that simple. But if you stay with your legacy format, even for flows where a translation service is offered, you will lose out on the richer dataset that ISO offers.
So, what's the solution?
Form3 is the solution. No matter what format your core platform uses, connect once to our single payment API for any payment scheme. We abstract the payment information from any underlying format so you don't have to. We ensure compliance with the schemes we face into. We run the infrastructure. We are adding more schemes with no change to our API. Our platform is maintained with daily updates at no additional cost to you. We dynamically scale to meet your growing volumes. All of this frees your resources and investment to focus on your customers.
ISO20022 standardisation isn’t just about message formats and isn’t an achievable reality. But you can still avail of the richer dataset that ISO enables at the payment schemes, without the complexity, by using our scheme agnostic services. We are ISO20022 compliant, so you don’t have to be.