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SWIFT ISO 20022 Programme | Early planning is of the essence

SWIFT ISO 20022 Programme | Early planning is of the essence

The new ISO 20022 Programme will forever change the way cross-border payments are made.

This transformation ushered by SWIFT is to all intents and purposes a global language for payments messaging, one that is already being used in over 70 countries. It is believed that it will, in the foreseeable future, become the “defacto standard for high-value payment systems of all reserve currencies, supporting 80% of global volumes and 87% of value of transactions worldwide”, according to the financial messages services provider.

ISO 20022 formatted messages in effect contain more structured data and enable faster execution of payments.

SWIFT has announced a staggered approach to the migration that will begin in 2022, thus giving Financial Institutions (FIs) some degree of flexibility in terms of maintaining their existing standards and allowing them to migrate at their own pace to mitigate migration impacts to some extent. By November 2025 though, SWIFT will only accept ISO 20022 formatted messages and will decommission three Messages Types (MT). These messages, known in the jargon as MT 1xx, MT2xx and MT9xx, will be grouped under a new naming – “CBPR+”, referring to “Cross-Border Payments and Reporting Plus”.

While the migration to the new system means that, the quality of data across the payments ecosystem will be richer, more structured and coupled with improved compliance and efficiency, it also means that FIs around the world, but especially on the African continent, will have to start overhauling their payment system soon.

In fact, SWIFT has recommended, for the sake of a smooth transition, that FIs complete the budgeting exercise and start their technical and operational assessment followed by changes and testing as early as November 2021.

Why it makes sense to outsource your readiness plan

Just a year later, FIs will be expected to exchange part of their message traffic under the new IS0 20022 format for their SWIFT payments and SWIFT Statements needs. This migration will have a huge impact on FIs’ entire payments operational framework and this why you need a partner now to start planning this overhaul.

It is worth mentioning here that the vendors of your third-party applications for generating and integrating SWIFT messages, such as Core Banking systems and Payment hubs also have a critical role to play in ensuring timely readiness to process ISO 20022 messages. Information gathering and planning as well as the setting up of a specialised project team are essential if you want to ensure that the different milestones are met in a timely manner.

The risks of not being ready

While ISO 20022 migration is not mandatory from a regulatory perspective, FIs that do not act now run the risk of being excluded from international payment ecosystems in the near future. As you may be aware, as from November 2022, organisations that not are yet ready to roll out ISO 20022 will be unable to receive and process part of their inward payments and will not be able to send ISO 20022 formatted messages to their correspondents.

If this happens to your organisation, it will find itself in a bad posture; be it towards its customers, banking correspondents, the local regulatory body or the entire SWIFT community. In turn, this will have a direct impact on your institution’s bottom line with serious loss of business opportunities and reputational impact.

MCB Group’s Customer Readiness Plan

Leveraging seasoned professionals and entities to assist in this transition is instrumental for its success.

MCB’s SWIFT Service Bureau is a Certified SWIFT partner and has the tools and expertise to assist you in this important ISO 20022 implementation.

MCB Consulting Services (MCBC), as an established international consulting company with a focus on the financial sector (notably through its accredition with Temenos), can accompany you through this migration. MCBC harnesses subject matter expertise in core banking solutions, developed over implementations, re-implementations and upgrades through more than 580 assignments across 41 countries.

We work together with you to achieve operational and technical readiness at each milestone while ensuring a hassle-free transition for your business. Importantly, we relieve you of the burden inherent in these types of transformations by standing as a solid first-line support between your organisation and SWIFT, and guarantee prompt responses to all your ISO 20022 related needs and queries.

Need help on this transformation journey? Talk to our experts: jeanmichel.felix@mcbconsulting.mu; kumar.beezloll@mcb.mu