Implementing ISO20022: Why are standards so important? Anne Pieckielon writes:

I recently told a friend that I was working on an ISO20022 study. Knowing my desire for action he expressed great surprise since payments standards “move with all the alacrity of an arthritic glacier”. Whilst climate change has dramatically increased the retreat of glaciers the payments world continues to move slowly which reflects the need to ensure resilience. But the payments world has equally changed dramatically in recent years. Developments such as open banking coupled with frenetic innovation in the FinTech world is making the payments supply chain all the more complex, while COVID-19 has accelerated trends such as the migration from cash. The standards challenge is thus all the more complex. 

Payment standards are critical to the effective functioning of the economy and represent a significant investment for many organisations, not just banks. These investments have to be seen in the long term as stability and longevity are key attributes of successful standards. Just look at Standard 18, still at the heart of the UK’s economy after 50 years. Because they are so successful and lie at the heart of legacy systems across the ecosystem, change brings both significant cost and risks. To reduce both, history tells us (for those that remember the replacement of the Bacs central infrastructure) that there is a tendency to go for the default of replacing “like for like” or using a translator service, thereby not realising potential benefits and reducing the value of change.

The implementation of ISO20022 in the UK is now at a critical phase with design work being completed on both the Bank of England’s RTGS Renewal Programme and Pay.UK’s New Payments Architecture (NPA). Effective engagement across the whole ecosystem will be critical to success for both of these programmes, with a focus on understanding how value can be derived in both the short and long term. In doing so it will be essential to look at value creation from the perspectives of all the different stakeholders involved. 

To help the Industry unlock this potential the Bank of England has committed to develop a series of market guides for different sectors. These will identify sector-specific use cases where use of extended message capabilities will address existing conventions in a consistent manner, allow integration with other business processes and consequently increasing straight through processing.  In essence the activity will use the migration to codify best practice and promote process harmonisation, thereby helping both to accelerate and maximise benefits realisation.

Another great social institution has looked to glaciers for inspiration in achieving profound change. In its endeavours to reframe the role of women in its films Disney has created the Frozen films featuring Elsa, a powerful and independent heroine. But some have argued that this new breed of heroine is simply a variation on the archetypal power-hungry female villain whose lust for power threatens the patriarchal status quo. 

Let’s hope that as an industry we do not fall into the same trap of recreating another narrow view of the role of payments, but genuinely consider the opportunities for all. I would encourage everyone with an active interest in payments to review the consultation and responses published by both the Bank and Pay.UK and contact them to get your views heard. 

This Northey Point guest blog was written by Anne Pieckielon who is an independent payments specialist. Why not share your views on implementing ISO20022 and why standards are so important – contact: Anne Pieckielon.

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