Does ISO2022 mean the death of the Payment Factory?

The adoption of the ISO20022 standard as the format of choice for corporate payments has really gathered momentum.  Kick-started perhaps by SEPA, it is now rapidly being used by the bigger banks for every payment in every country.  Payment factories to a large extent were born out of the formats nightmare faced by large corporates.  Payment solutions were designed to handle that complexity for customers across countries and banks, allowing them to think just in terms of payments and not formats.  So, doesn’t the move to a single standard fundamentally destroy the raison d’être of the payment factory?

It’s correct to say that payment factories historically focused heavily on the challenge of presenting a ‘payments’ view to the user whilst dealing with programming dozens of formats in the background.  But the increasing adoption of the XML standard by corporates definitely doesn’t mean payment factories are dead.  On the contrary, it allows a shift of focus towards some really interesting value creation solutions such as payment risk analytics, payments warehousing to maximize Days Payable Outstanding (DPO) and Payments on Behalf (POBO).  If anything, it finally paves the way for people to understand the real value that payment factories can bring to their organisations.

According to our recent study, 80% of organisations do not have a single, enterprise wide payments process.  The study also revealed that fraud was the top driver for investing in payment factory solutions.  So, aren’t those organisations now looking at the gaps and thinking that the brave new world of a single standard means that all this will be solved by their ERP supplier?

Don’t be fooled that the ISO20022 standard represents a single clean standard. There’s variation from bank to bank and there always will be.  You still need a payment factory to elegantly handle that, especially if you are working across geographies and within a complex back office landscape.