Banking Technology recently published an article that provided good background on the current state of the adoption of ISO 20022 standards for payments and also explains some of the current challenges. First a brief definition:
ISO 20022 provides a means for a global dictionary in financial messaging across multiple countries and in a variety of banking systems.
This is important for a variety of reasons. As technology is increasing global commerce, a common standard is needed in orders to transact effectively between countries. As many nations, like the U.S., develop new platforms for payments, specifically faster payments, now is the time to consider adopting a new standard. In addition to providing a common “language” to exchange payments, this article supports to idea that ISO 20022 will also give rise to new innovation:
The adoption of ISO 20022 standards by market infrastructures globally – with the long-term goal of interoperability across payment systems – are going to advance innovations and offerings in delivering real time payment transactions.
Similar to the many digital developments that are transforming our industry, this kind of investment decision is not a bottom line one as much as it is a general strategic one. Real-time payments are becoming not only a must-have to compete with third-party providers and non-bank payment services providers (PSPs), but also a general business enabler. What will transpire is that the real value of real-time payments will come from the new services that are going to propagate as a byproduct.
Overview by Sarah Grotta, Director, Debit Advisory Group at Mercator Advisory Group
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