Banks need the new ISO payment standard to remain competitive
One of the major drivers for ISO 20022 adoption is to remain competitive. By implementing a common standard banks can have a platform to innovate at pace and with lower costs.
Many banks now see ISO 20022 as a critical element to delivering value to their corporate clients. But the benefits of ISO 20022 are not solely external. Increasingly, APIs are being used to support both deep integration within the bank and with a broad spectrum of fintech partners. ISO 20022 allows the capability of having a single data model across various computer languages and therefore across multiple use cases.
With a shift towards data-driven architecture, ISO 20022 allows banks to generate greater amounts of standardized data to provide targeted insight. The move to ISO 20022 will therefore be of paramount importance for banks to take advantage of richer, standardized data sets. With more payment volumes set to adopt ISO 20022 by 2025, the discussion is moving from the standard of simply serving transactional needs to examining data that can be extracted from these transactions.
In other words, over the next few years we will see payments refocusing from a commoditized proposition to one offering strategic added value. Yet being “data-aware” is not good enough. Banks need to be powered by that data. Because cutting costs is no longer enough to sustain banks, they must use payments data to deliver more appealing propositions and revenue-boosting, value-added services.
As the adoption of ISO 20022 remains fragmented in the U.S. for the time being, many banks will continue to question how best to take advantage of the standard. However, it should be evident that ISO 20022 is coming and the time to prepare is now.