News & analysis from across the industry
ISO 20022 – a common global language and a major opportunity
Deutsche Bank recently issued a report in which it recommended that banks don’t merely see ISO 20022 as just another IT project; rather, it says, banks should see this as a significant opportunity. The report goes on to say:
“Given the effort required, it is understandable that some banks may look for shorter migration journeys… but, not only do you risk losing information this way, you almost certainly miss a fantastic opportunity to improve efficiency and client service”
This simple statement reflects one of the major issues facing the Financial Services industry today. The need to respond quickly to initiatives, competition and legislation has created an environment where the most expedient answer is to simply develop another standalone system or set-up, or address the specific issue in isolation.
Over time this has led to the evolution of a payments landscape that is silo based, costly, inefficient and highly complex. It’s easy to be critical of this situation as we sit here in 2019 in a world where the level of change is constantly increasing. The nature of technology, and indeed its rapid evolution over the last generation, has changed to the extent that competition and threat exist in ways that would have been difficult to imagine as recently as five years ago.
Successful delivery of change
ISO 20022 could be seen as a standalone issue or, as Deutsche bank suggests, it could be an opportunity. To deliver this, banks need to exercise vision and take a broad view of their environments. Simply adding another silo, or doing the minimum to meet the needs of the standard as it develops, risks missing the opportunity and losing market share to challengers.
In many ways, the situation mirrors what we see in testing payment systems every day. Many FIs recognise that their systems are inefficient, difficult to maintain, loaded with risk, complex and close to impossible to automate. These financial institutions would change their environments and invest in simpler, automated, less manual and cheaper ways to test, but the way budgets are allocated doesn’t make this possible.
At face value, project-based allocation can seem a better way of distributing resources. However, it means that organisations can’t invest in a common solution that would deliver benefits to all projects, rather than just the one being addressed at any given moment.
Budget allocations can stifle innovation
I know of more than one organisation that can see it needs to deploy an enterprise-wide test platform in payments, but in order to do so has to align budgets from stakeholders across the entire company. The result is that the interests of one product line or department can prevent an institution from making real change. This in turn results in silos that prolong inefficiency, increase cost, and exclude the company from the benefits of modern testing technologies.
Perhaps the Deutsche Bank statement, though nominally about ISO 20022, reflects a greater need in the payments industry to recognise the opportunity that exists if we bravely decide to approach things from a different perspective.
You can read more about how to successfully implement new technology in some of our other recent articles: