Banks and payment institutions are now rushing to upgrade their core systems, because of the ISO20022 migration approaching. The great opportunities offered by the new messaging protocol are for the Electronic Money Institutions (EMIs) and banks to make payments in a way more efficiently. Anyhow, the cost of upgrading core system is large and also the challenge of managing multiple messaging protocols comes along with the transition. Without completely redoing their core system, how can institutions and banks migrate to ISO20022?
As a part of an initiative to create a global standard for payments, the migration to ISO20022 using CBPR+ is made. Richer data can be transported in payments, including tracking, enhanced analytics and automation through this ISO20022. This information can also be used by the Payment Service Providers (PSPs) to offer a better payment experience to their customers and improve the efficiency of their operations. Opportunities for value-added services, as well as faster and more reliable compliance checks and fewer false positives and investigations are also brought by this.
Without challenges this migration is not possible. Financial institutions and EMIs will need to migrate to ISO20022, all while remaining efficient and maintaining their data quality. It is not just another IT work, as the new ISO standard completely changes the way of work in institutions. One good example is that many messaging components will need to include a new field length, additional fields and even new characters. At a much faster rate, banks will be able to deliver larger quantities of data as well as process transactions, compliance checks, and fraud checks. Not only the payment system gets impact by this, but also the core, the web banking, the trade finance, the liquidity, the Anti Money Laundering, the accounting and reconciliation, or even more systems and applications gets their impact through this. And all these impacts depend upon the size and activities of each institutions. Due to these reasons no one can dismiss or keep delaying the implementation of ISO20022. In order to maintain a competitive advantage and meet new regulations, all the financial institutions need to prioritize this migration. PSPs can send and receive messages in either MT or ISO20022 format according to the SWIFT’s new approach to ISO20022. But in November 2025, the MT messages will be decommissioned.
All major market infrastructures such as Target2 and EURO1 in Eurozone, Bank of England, and Fedwire, are adopting ISO20022. As the time keeps running every payment institution needs to ensure the transition goes as smoothly as possible. All banks and EMIs should get their systems ready. Some banks are way ahead in modernizing their technology, but some institutions rely majorly on legacy technology or don’t have the necessary resources for developing their infrastructure at this point of time. In this case, a proven third-party solution can be adopted to handle the migration.
This approach is cost effective and also with least operational burden. Banks and EMIs can maintain their existing infrastructure as well as they are able to collect relevant data by this migration. The banks can meet the ISO deadlines and progressively they can upgrade their internal infrastructure to meet the needs of the new messaging system. Low impact, cost effective and high-speed solution to all the complex problems. This is what aplonHUB is all about. A solution that allows banks and EMIs to accept ISO20022 messages without upgrading their entire core system.
