Mortgages in Minutes

SWIFT ISO Migration Delay

We Must Not Waste This Opportunity

Mick Fennell
Mick Fennell – Business Line Director, Payments

On the 16th March SWIFT announced a 12-month delay for the go-live of the SWIFT cash and payments migration to ISO 20022 standards. That pushes the initial deadline to November 2022.

Phew. Now we don’t have to think about this less than welcome upheaval for at least another year. Wrong, wrong, wrong!

Embrace the Change

First of all, upheaval is never the most welcome of guests. However, when that upheaval is warranted, when that change is necessary, one must welcome it, one must embrace it. Without this move to a richer, more standardized data set, we cannot harmonize the payments process across cross-border and domestic clearings. Without this harmonization, we will fail to meet the needs of the digital payments world.

We need transparency of information. We need real-time throughput, and we need to modernize our processes, our validations, our data sharing and transmission. This is a welcome change. This is about keeping our payments ecosystem relevant to the world we live in. We must embrace this change or the digital payments world will leave us behind.

The Y2K of Our Time

Secondly, there’s a very good reason for this delay. Now that the impact of the new standards are becoming clear, the industry has realized that they are not trivial. This is not a simple change.

That fact was forewarned by the creation of a transition period for SWIFT members to phase in their support for cross-border ISO, rather than the usual annual drop-dead cutover date for SWIFT changes. This transition period has now gone from 4 years to 3 years with the delay in the initial deadline. So, 2025 is still the final date.

The changes required in one’s processing environment are significant. It is not just the processing and execution of the transaction that is in play, it is also:

  • The capture of the transaction request itself, where new data elements and validations must be applied
  • The management of that additional data throughout the processing value chain
    • Compliance checks for AML and Fraud need to be updated
    • Account servicing and management for the generation of statements and advices need to be updated
    • Reporting to customers and channel functions need to be updated
  • Reconciliation functions need to expand to cover the new data elements
  • Message formatting, message validations, message enrichments throughout one’s integration environment need to be updated and serviced

The core of payments processing will change, as well as all the touchpoints in the transaction lifecycle. Financial institutions need time to apply these changes, to upgrade or replace components, systems, even entire platforms. This is the Y2K of our time.

Good-to-Go on Cutover Day

Thirdly, although there is a transition phase to alleviate the immediate pressure of the go-live deadline, it has been obvious for many months, that a large proportion of the industry wants to be ready to rock’n roll on the first day of cutover. For them, the transition period is a distraction. They need to be live on SWIFT ISO from the start, whether they are a global correspondent bank supporting cross-border payment servicing, or a small specialist private bank supporting wealthy clients who expect premier levels of service, or a domestic market-focused player who enables customers to send or receive foreign transfers. No one wants to be the bank that has been left behind to provide a less than excellent service to their clients on day 1 of the new era. 

Too Close for Comfort    

This pressing need to be live and fully compliant on cutover day has created enormous pressures on the IT and Operations departments of banks around the world. November 2021 was too close, it didn’t give enough time for organizations who wanted to be fully compliant to get ready in time. Remember, the final rules are only going to be published later this year. How are banks, both big and small, going to be ready across their entire processing infrastructures when testing has to start early in 2021 for a November 2021 go live? The deadline had to change.  

Still No Time to Waste – Plan, Schedule, Execute

So where are you now? The deadline is November 2022 – do we all have plenty of time to hit that deadline? No, it’s not plenty of time. Not when the impact is so enormous. There is no time to waste, so don’t waste it!

Banks need to plan, schedule and execute in 2020. They need to identify all of the systems and all of the touchpoints that will need to be addressed. The detailed plans will have to be created and finalized in 2020 for implementing those changes in 2021. Upgrade, replace, convert, enhance in 2021 so that you are ready to start testing in early 2022. Do not waste this opportunity to get it right. 

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Mick Fennell
Mick Fennell – Business Line Director, Payments