Swift bids to drive ISO20022 harmonisation

Financial messaging network Swift is working with a host of market infrastructure providers and banks to develop a framework for harmonisation of the ISO20022 standard, amid concerns that a proliferation of different flavours of the protocol will lead to fragmentation.

The group is looking to build a roadmap for ISO20022 harmonisation to be presented at Swift's annual Sibos meeting in October, following a one-day summit in La Hulpe in April.

While recognising strong global traction for ISO20022, the group of 26 senior executives from 20 global market infrastructures expressed alarm over the sheer proliferation of ongoing initiatives worldwide. Currently, there are over 200 projects around the world pushing to implement ISO 20022 across payments, cash management, securities, trade and treasury.

Financial institutions which have a global footprint are evaluating the collective impact of having to implement numerous ISO 20022 projects, staged across multiple market infrastructures, each potentially with their own ‘flavour’.

Says David Renault, head of service maintenance and procurement at EBA Clearing: "A choice of 31 flavours is great for ice cream, but is a worse-case scenario when you are trying to adopt a singular definitive standard."

Part of the problem lies in the inherent flexibility of ISO 20022, allowing for implementation of different message versions, different market practices and/or different timetables.

Edwin De Pauw, head of product management at Euroclear, comments: "We need to balance inherent flexibility and the resultant fragmentation, versus loss of freedom, the need for a more persistent process and the need to drive market interoperability."

The group debated Swift’s proposal for tighter community management and a common framework focused on a number of pillars: sharing of information using MyStandards as the central harmonisation platform, establishing global market practice and introducing stricter message version control and release management.

The group also argued that conformance to these principles may have to be phased over time to reflect different maturity levels of ISO 20022 implementation. Some have already implemented projects and have been ‘live’ for many years, whereas others are at much earlier stages, where the standard is still ‘under consideration’.

At the conclusion of the Summit, the group agreed to continue to work on the harmonisation framework over the next few weeks with bi-lateral discussions, before reconvening at Sibos in Singapore, in October, with the aim of finalising an implementation roadmap.

As Clearstream's Bernard Lenelle observes: "Getting these major market infrastructures to work together is significant. As the tidal wave of projects could become all-consuming, any harmonisation is better than no harmonisation."

Related Companies

Swift

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Sibos Payments Wholesale banking

Keywords

Transaction banking Financial messaging

Comments: (6)

A Finextra member 20 May, 2015, 09:46

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There has to be balance between flexiblity and Standardisatioin. Creating more flavors can lead to chaos in implementing the standards and governance. This can kill the real reason behind implementing ISO20022

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A Finextra member 20 May, 2015, 09:51

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Is it too late? Will harmonisation of different uses of just PAIN and PACS usage be challenging.

All too often 20022 is described as a message content standard, ignoring the business context in which it is used.

I see a world of difference between a real-time payment that needs immediate acceptance acknowledgement and a SEPA or BACS credit that might be rejected asynchronously days later. Scheme rules provide some of the context, but there will be confusion if basic expectations of these alternatives aren't built into the common structure. This will enable those who see the "ISO20022 supported" label on a product to be sure that it will do the job they need.

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Barry Kislingbury - ACI Worldwide - London 20 May, 2015, 11:26

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It’s great to see that ISO 20022 is now accepted as the way forward, however I am concerned at the number of ‘schemes for harmonisation’ that are now appearing. First back in January 2015 EACHA published their study on Interoperable Immediate Payment Schemes, the EBA responded to the ECB and ERPB call to action with their Instant Payment Forum, and as recently as the end of April the ISO 20022 RMG convened a very inclusive and independent roundtable to discuss and make a plan for Global Interoperability of Real Time Payment schemes, which SWIFT, market infrastructures, associations, vendors and the press were invited to. Now we hear that SWIFT, not including all interested parties, has also held a meeting to cover the same topic. I have three main concerns with this:-

There are now so many of these interoperable schemes or working groups which are expensive for the industry to resource, surely this is what the ‘International Standards Organisation’ is there for, are they not best placed to bring all the parties together to create a single way forward?
Did SWIFT take an all-inclusive approach? Possibly not as they now compete commercially with some stake holders, unlike the ISO and the EBA. Other parties, including vendors see the good and the bad with standards as we work with them all the time, we have valuable insight and experience and are willing to share.
Following on from the above, you have to question if SWIFT is truly an independent standards organisation any longer? There is already scepticism in the industry, especially as it is developing the Australian NPP immediate payments scheme.

I would encourage SWIFT to make the output public as do the EBA and ISO, including details of participants and key discoveries, so all stake holders in the industry can benefit.

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A Finextra member 20 May, 2015, 15:15

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From Stephen Lindsay, SWIFT Standards:

Good to see this important topic getting an airing here. Yes – we’re 　fully aware of, and support, other organizations’ harmonization initiatives. In particular, we welcome the ISO working group on Instant Payments market practice, and we expect to contribute to it. The initiative described in the article is not limited to real-time, payments or just market practice – rather, it takes a wider view of how the standard is being rolled out, principally by Market Infrastructures, and it proposes harmonization along a number of dimensions – market practice, but also release management (the timing of cutovers to new versions), version management (how many versions of a message to support, when to upgrade), publication of timelines and other information.

Moving a whole market to a new discipline is a big undertaking - we want to move as fast as possible, so we’ll keep focussed on the groups we’re already involved with – but we’ll keep communicating on this as the initiatives start to coalesce. Thanks for your interest!

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Jayakumar Venkataraman - Infosys Ltd - London 21 May, 2015, 11:31

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Single harmonised standard is no virtue in itself (view Inflexibility / straitjacket) and multiple standards is not a vice (flexibility)... Is this a lot of time and expense spent chasing the impossible.. should we focussing on how one can support easy implementation despite multiple variants...

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A Finextra member 27 May, 2015, 12:41

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It seems to be a good initiative ofcourse. Harmonisation is utmost required, as it will give a better underlining to the implementation stakeholders. Since, the market demand to move towards ISO20022 standards is increasing day by day globally, having multiple implementation rules would not be encouraging and will be a chaos within.

Since markets like European markets have high stakes in the implementation of the same with SEPA, the variation of PAIN, PACS, etc implementation in NG-RTGS in India is visible. And having the same repeated in upcoming NPP implementations in Australia may cause increasing the number of new rules within one standard (all because the format have a lot of flexibility and independence). Multiple versions support is another area, which, if gets harmonised will set a very good standards of the implementation of ISO20022 (we have had a hard time in multiple version support in some pain messages in a recent implementation in SEPA region, standardisation would for sure be a nice to have in this case).