The introduction of ISO 20022
ISO 20022 is a new payments messaging standard that has been in the process of being rolled out for a number of years. It will mean that familiar SWIFT messages such as MT102 and MT 940 will start to be replaced with new ones. There will be a period of transition and a number of domestic payment systems will be switching over to ISO 20022. For example in the UK, the CHAPS high-value payments system will migrate to the new standard in April 2023.
The new standard will significantly increase the amount of data that will be able to accompany the payment instruction. One of the main benefits will be an increase in the ability to automate the allocation of receipts to customer accounts – reducing the time consuming, expensive and error-prone need for manual intervention. In addition, it will allow more information regarding ultimate beneficiaries which will support any requirements for enhanced anti-money laundering protocols.
The Bank of England is keen to encourage the adoption of the new standard and has been discussing with the ACT on the views of its members through the Standards Advisory Panel (of which Caroline Stockmann is a member) and through direct conversations with the Policy and Technical team.
To support these discussions the P&T team sent a short survey to its panel of treasurers. This note summarises the results.
What these results suggest is that whilst there is a broad knowledge of the introduction of the new standard, there is little understanding of what the new changes will offer. We know that in many case the treasury team will not be involved in payments, and where they do, it is often purely for treasury-related payments. The introduction of the new standard may occur in the background with the first that any teams learn about it being when a payment goes awry (MT 103) or the balance on a bank account needs reporting on (ie an MT 940 / MT 942).
As discussed at the recent Annual Cash Management Conference in March, the introduction of the new payment standard has the potential to transform how companies interact with retail customers and other companies. Being able to allocate customer receipts in real time can increase sales, provide better customer service and manage credit risk more effectively. As the new standard starts to be deployed, companies will increasingly find that competitors have implemented ISO 20022 and begun to take advantage of its benefits. The new standard provides treasury teams with the opportunity to influence a key part of their business operations and play an active role in the success of their company.
If you’d like to get more involved in our work around payments (or indeed any other treasury related topic), please contact Sarah, James or Naresh at technical@treasurers.org
On behalf of the Policy and Technical team, I’d like to thank the treasury community for responding to this survey. If you’re not yet part of this community and would like to participate in future surveys, please drop a note to technical@treasurers.org
