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How to migrate to ISO20022 without touching your core systems

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.

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Goldman banker hired by the Citi bank

Citigroup has hired Luisa Leyenaar-Huntingford from Goldman Sachs. This new hire is to co-head its global infrastructure franchise. Because, it seeks to win more business from cash-rich investment firms focusing on infrastructure deals. Leyenaar-Huntingford will be based in London. Responsibility will be shared with Todd Guenther in New York.

The pair will work closely with industry teams covering healthcare, industrials, natural resources and clean energy transition (NRCET), technology and communications. Leyenaar-Huntingford helped in the establishment of the Goldman’s infrastructure franchise in her time at the Wall Street bank. They will team up with Citi’s Iberia co-head of banking, capital markets and advisory (BCMA) Jorge Ramos will continue to be a senior member of the global infrastructure franchise.

The infrastructure sector is poised for further growth, according to the memo. The memo was released by Citi’s global co-heads of the alternative assets group Anthony Diamandakis and John Eydenberg, and its EMEA head of BCMA Nacho Gutierrez-Orrantia. There was significant private investment demand across the globe to deal with environmental, energy, transportation, waste, communication, digital and other social needs.

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Banks make slow progress on UK gender pay

Major banks in Britain made a slight dent in their gender pay gaps. Several insurers went backwards. Companies in Britain with more than 250 employees have been required to publish the difference between the pay and bonuses of their male and female employees. They got a reprieve due to the pandemic, last year. The financial services sector has shown one of the largest genders pay gaps in Britain. The lack of women in senior jobs is the main reason.

Pay gap data from 21 major financial institutions showed a narrowing in their average mean gender pay gap. This is just 0.4 percentage points. Banks alone had a pay gap which narrowed by one percentage point. Ann Francke, chief executive of the Chartered Management Institute said that the UK’s financial services industry has often been singled out. It really does have to get its house in order. Goldman Sachs had the widest gender pay gap in the year to April 2020. Goldman posted a gender pay gap of 51.8%. The bank told the staffs that narrowing the gap further was a critical priority. A spokesperson for banking lobby group UK Finance said, that there is clearly more still to be done.

FTSE 100 insurers Prudential, Legal & General and M&G reported a widening in their pay gaps. Prudential’s UK gender pay gap widened to 45.2%. M&G also reported a widening in its pay gap in the most recent year to 30.5%. The M&G spokesperson said that they are determined to narrow their gender pay gap and will do this by achieving better representation of women in all roles at all levels of our organization. Legal & General’s mean gender pay gap widened to 30.8%.

The insurer said that the legal & general is tackling the underlying causes of its pay gap. This is by creating a more diverse workforce and a more inclusive culture through sustained, long-term action. Admiral had a gender pay gap last year of 12.8%. The 21 firms surveyed were Barclays, HSBC, Lloyds, NatWest, Standard Chartered, Bank of America Merrill Lynch, Goldman Sachs International, JPMorgan, Morgan Stanley, UBS, Credit Suisse, Deutsche Bank, PGMS (a Phoenix unit), abrdn, Schroder Investment Management, St James’s Place, Legal & General, Prudential, Admiral Group, Aviva and M&G.

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BOJ to lower inflation target-Japan’s finance minister

Japan’s outgoing finance minister, Taro Aso, said that he had proposed lowering the central bank’s 2% inflation target. This is when the prices took a hit from plunging oil prices. He was the finance minister for nearly nine years. The slump in oil price was among the main reasons the government could not officially declare an end to deflation. In his final news conference as finance minister, Aso said that he proposed to Governor Kuroda that, with oil prices falling this much, it would be hard to achieve 2% inflation. Hence, the target must be lowered at some point. He stated this by referring to Bank of Japan (BOJ) chief Haruhiko Kuroda.

Aso also said that the governor said he would do his best to achieve the target. This is stated by adding that policymakers must scrutinise at some point, why the BOJ’s inflation target of 2% has not been met. The remarks highlight how the government and lawmakers distanced themselves from the BOJ’s target years ago, despite central bank reassurances that achieving the target was possible by maintaining or increasing stimulus.

Aso was deeply involved in negotiations with the BOJ. After Kuroda took over as governor, he deployed a massive asset-buying program. This is for pulling Japan out of deflation. Aso supported the BOJ’s stimulus efforts. He is a member of the cabinet. And also, had raised many doubts that monetary policy alone can reflate the economy out of the doldrums. New Prime Minister Fumio Kishida is set to form a cabinet.

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