SWIFT ISO 20022 file format: What the new message standard really means for your business
As the go-live date of November 2022 draws closer, banks are thinking about the new ISO 20022 file format and the practical implications it will have for their business. This means that many are turning to MT-MX conversion tools, which are likely to play a big role in helping banks through the transition period.
But the ISO 20022 data model has bigger implications for banks, too. The new message format is fundamentally different from the current SWIFT MT messages and if banks fail to recognise – and act on – this fact, then they are missing an opportunity.
How is the ISO 20022 XML file format different?
ISO 20022 was designed with the intention of providing ‘consistent, rich and structured’ data across the financial services ecosystem, according to SWIFT. XML, or extensible markup language, is both easier to understand and more richly descriptive, making it an obvious choice for the new standard. But what does this difference actually mean for your business?
• Standardisation: MT messages have not evolved at the same rate as the payments and transactions landscape they were originally designed to support. Consequently, banks have ended up customising or adapting them to include the required information. The end result is a lack of standardisation which increases complexity and cost, with bank-specific parsers often required to handle MT messages.
The ISO 20022 file format will give the industry a ‘clean slate’, and is designed to incorporate a far richer set of data fields, eliminating the need for customisation and workarounds. Banks should be able to use this to lower the cost of message consumption and publication as well as to leverage great control over their data and automate processes – something which is far easier when working with standardised formats.
• Enhanced data: The richer, enhanced data mentioned above is the other major difference that the new ISO 20022 XML file format will make to banks. With more information on payments and transactions than ever before, banks who can leverage this will have a powerful new tool for innovation. From improving customer experience to strengthening forecasting to building new products – the opportunities are endless for banks who can get this right.
So how do you get it right? This is where banks need to be thinking beyond the initial transition period. Some translation of MT-MX messages will be inevitable given the complexity and now tight timelines involved. But by relying solely on MT-MX conversions, banks will quite literally be throwing away this additional data – and all of the benefits outlined above.
This is why we are helping banks with two key actions to prepare for ISO 20022:
• Ensure you have an MT-MX converter in place for November – and that the partner you choose is able to handle the inevitable updates and changes that will come post go-live on your behalf, avoiding the need for your IT team to spend time on this.
• Think about the next steps. You can’t rely on MT-MX translation forever so how are you going to position your payment systems to tackle the MX format natively, as well as to support a modern banking and payments ecosystem?
To discover how we're getting firms ready for ISO 20022, contact us here and our team will be in touch.