Sibos 2022: the ISO opportunity

The ongoing shift to ISO 20022 standards in digital payments is more than just a compliance exercise for businesses, according to Luke Perkins, ANZ’s Head Global Cross-border Product. It’s about grasping the opportunity the new global standard brings.

“One of the key opportunities [of ISO 20022] from my perspective is the consistency, the data integrity you can deliver,” Perkins told On Air with ANZ Institutional on podcast.

“The fact that you have a consistent standard for payments - not just cross-border, not just domestic, but payments - I think… gives us a lot more opportunity, in terms of how you deliver experience to customers, and how you then execute on those transactions as well.

“I think the worst thing we can do is think of it as a tick-the-box compliance program of work we just do because we have to do it. I think there's certainly opportunities there to explore.”

ISO 20022 refers to a modern global standard for data associated with digital payments, including messaging. The standard has come into increased focus ahead of November, when the SWIFT community formally migrates to the new system.

Several markets in the Asian region have already implemented ISO20022 for domestic real-time gross settlement payment systems, and Australia’s New Payments Platform has been using the standard since its inception in 2018. More countries are now transitioning to the ISO standard and will continue to until 2024, proving an overlap period between new and existing systems, particularly for cross border payments.

For Perkins, the shift – which he called “probably the biggest change in the cross-border space in my career” - will help businesses “take away some of the inefficiencies of having to translate messaging”.

But it will also increase the data opportunity, in terms of the “enrichment, insights [and] reconciliation” that come with migration, he said.

Perkins made the comments in conversation with Carolyn Young, ANZ’s Head of PCM Product, Australia. The experts were speaking as part of a series of podcasts recorded in the lead up to the Sibos financial services event in October. You can listen to the conversation below.

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Only the beginning

Young said there was no question the ISO shift would have a “transformative” impact on the market, although noted it was just an early step in a longer, broader road for payments.

“It's only the first of many larger transformations, in my view,” she said. “But the ISO implementation is fundamentally creating that backbone for ongoing innovation.

“It really is going to be the accelerant for a lot more to come, for sure.”

In the short term, Young said complete adoption of the standard would take time, given many businesses are at contrasting steps in their digital transition.

“Everyone's at a different stage from a maturity and sophistication [perspective], thinking around how they leverage payments in their business,” she said.

Many businesses see ISO “as part of a proposition that will take them to a more accelerated product capability”, Young said, forcing them to confront how ready their systems are for “handling the information that would come via the ISO standard, but also the opportunity to receive it at speed”.

For Young, it’s critical to remember payments are not just about the value transferred, but the context they provide.

“Not all [businesses] are at a point when they can ingest that level of context,” she said. “And if they are taking it on, it's usually quite manual still, unless they are taking their business model to a far more digital state.

“What I think we do really well [at ANZ] is help our customers manage that.”

Helping out

Perkins said ANZ’s presence in the Asia-Pacific made it well suited to helping customers handle the transition, particularly given the bank’s presence in regions further along the ISO transition process than in Australia.

“In terms of the adoption, we've got both domestic infrastructure readiness as well as the cross-border element,” he said.  “[ANZ is] fortunate enough at this point to have already implemented in a couple of markets, in the Philippines and most recently Singapore as well. I think that gives us a great opportunity to learn from those experiences.”

This “really holds [ANZ] in great stead for when we look at some of the other markets coming up towards the end of this year” – including Australia and New Zealand, Perkins said.

For Young, that multinational experience is critical – “but we've also got our experience domestically building out real-time payments in Australia with the use of ISO under the NPP,” she said.

“I think that project … has been a really good foundation for our understanding of how to implement ISO at the scale and breadth that you need for high-value payments.”

The wide-ranging conversation also touched on adoption of real-time payment systems, payment system interoperability, and the challenge of coexistence. Listen to the podcast above to find out more.