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Over the past decades, banks significantly increased their efforts to implement adequate frameworks for managing interest rate risk in the banking book (IRRBB). These efforts typically focus
Find out moreAs we rapidly approach SWIFT’s fifty-year anniversary, March 20th this year witnessed possibly one of the most significant changes in global financial payment and reporting messaging.
Whilst at this stage the focus is primarily on the interbank space, there will be some impact on corporate treasury within this migration period. Zanders experts Eliane Eysackers and Mark Sutton demystify what is now happening in the global financial messaging space, including the possible impacts, challenges and opportunities that could now exist.
The SWIFT MT-MX migration is initially focused on a limited number of SWIFT FIN messages within the cash management space – what are referred to as category 1 (customer payments and cheques), 2 (financial institution transfers) and 9 (cash management and customer status) series messages. This can translate to cross border payments (e.g., MT103, MT202) in addition to the associated balance and transaction reporting (e.g., MT940, MT942) within the interbank messaging space.
This is an interesting and relevant question. Whilst the actual MT-MX migration is focused on the interbank messaging space, which means existing SWIFT SCORE (Standardised Corporate Environment), SWIFT MACUGs (member administered closed user groups) and of course proprietary host to host connections should not be impacted directly, there could be a knock-on effect in the following key areas:
At a high level, the benefits of ISO 20022 XML financial messaging can be boiled down into the richness of data that can be supported through the ISO 20022 XML messages. You have a rich data structure, so each data point should have its own unique xml field. Focusing purely on the payment’s domain, the xml payment message can support virtually all payment types globally, so this provides a unique opportunity to both simplify and standardise your customer to bank payment format. Moving onto reporting, the camt.053 statement report has almost 1,600 fields, which highlights the richness of information that can be supported in a more structured way. The diagram below highlights the key benefits of ISO20022 XML messaging.
Fig 1: Key benefits of ISO20022 XML messaging
Zanders foresees several challenges for corporate treasury around the impact of the SWIFT MT to MX migration, primarily linked to corporate technical landscape and system capabilities, software partner capabilities and finally, partner bank capabilities. All these areas are interlinked and need to be fully considered.
ISO20022 is now the de-facto standard globally within the financial messaging space – SWIFT is currently estimating that by 2025, 80% of the RTGS volumes will be ISO 20022 based with all reserve currencies either live or having declared a live date.
However, given the typical multi-banking corporate eco-system, Zanders believes the time is now right to conduct a more formal impact assessment of this current eco-system. There will be a number of key questions that now need to be considered as part of this analysis, including:
The corporate treasury community can reap substantial benefits from the ISO 20022 XML financial messages, which offer more structured and comprehensive data in addition to a more globally standardized format. Making the timing ideal for corporates to further analyse and assess the positive impact ISO 20022 can have on the key questions proposed above
Over the past decades, banks significantly increased their efforts to implement adequate frameworks for managing interest rate risk in the banking book (IRRBB). These efforts typically focus
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