The CGI-MP – What’s it All About and Can it Really Deliver?

In this third article in the ISO 20022 series, Zanders experts Eliane Eysackers and Mark Sutton take a focused look at the Common Global Implementation Market Practice Group (CGI-MP). Explaining its role, objectives and how it has the potential to redefine what is possible in terms of taking the multi-banking cash management model to the next level. With the end-goal being a simplified, standardised, low cost, low maintenance multi-bank cash management architecture.

Who or What is the CGI-MP?

The CGI-MP was formed in October 2009, with Swift playing host for the inaugural meeting of an inclusive collaborative group of key stakeholders – banks, software vendors, corporates, national payment associations, that would redefine the competitive boundaries within the multi-banking cash management space. From these humble beginnings, the CGI-MP now has 355 members globally and has mobilized its domain expertise to create and publish implementation guidelines for the XML corporate payment message (pain.001.001.09) including an updated payment status workflow guide. The CGI-MP objective has always been crystal clear: "A corporate can use the same message structure for all their payments with all of their transaction banks reaching any payment system across the globe.”

What challenges existed with the original CGI-MP implementation guidelines?

Whilst the April 2009 ISO standards maintenance release provided the ideal opportunity to demonstrate the benefits of this initial collaboration through the inaugural implementation guidelines, the past 14 years have highlighted multiple friction points that existed around the corporate adoption of the version 3 XML payment message. So, despite the guidelines, we have witnessed significant divergence in terms of the banking communities implementation of this global financial messaging standard. The main challenges are summarized below:

• Inconsistent Payment Method Identification: Whilst the CGI-MP implementation guidelines recommended the use of standard codes, history reveals both the non-standard use of these codes and continued use of bank proprietary codes.
• Limited Adoption of Data Over-population: This was a core principle of the CGI-MP implementation guidelines which enabled the corporate community to establish a more generic core template. However, few banks actually embraced this core principle.
• Continued Focus on Unstructured Tags: Despite the guidance, the banking community has generally leveraged the unstructured tags to support local country rules like central bank reporting.
• Core References: Corporate implementations have revealed significant differences in the way the key batch and transaction references plus the payment details are supported and processed.

What is different about these new CGI-MP implementation guidelines?

The CGI-MP has taken these lessons learned from the version 3 implementations to try and remove the friction caused by the bank proprietary implementations. A core document within the implementation guidelines is Appendix B which is a supporting document that focuses on the additional specific local country rules. For example, which xml tags are used for central bank reporting in a specific country. This is important as it provides the opportunity to try and achieve a greater level of standardization around interpretation and therefore implementation of the XML payment message.

The most important difference is the ‘change of mindset’ that will be required from the banking community help deliver a win-win situation. So the CGI-MP is recommending a more prescriptive approach to the XML version 9 guidelines, which will help remove the numerous friction points that have been ‘called out’ above. Banks that follow the same ‘lift and shift’ logic to how they developed pain.001 V03, which typically followed the core logic of their own proprietary file formats will be missing a real opportunity to remove friction and accelerate implementations.

Considerations for Corporate Treasury?

The CGI-MP has now published the XML version 9 implementation guidelines, which CGI-MP member banks are now reviewing as part of their own XML version 9 service proposition. Based on the experience around the development and implementation of the original XML version 3 proposition back in 2009, banks are probably 6-9 months away from launch. However, whilst there is no requirement for the corporate community to migrate, XML version 9 presents a real possibility to:

• Remove friction between the banks.
• Simplify and standardise the XML version 3 implementation.
• Maximise the end to end benefits of structured data.
• Achieve greater bank portability.

In Summary

Considering the potential significant impact of the ‘change in mindset’ from the banking community, alignment to the CGI-MP guidelines and specifically Appendix B could become a table stake from a corporate perspective. It will be very important for the corporate community to have a very focused and structured discussion with their banking partners to help determine if the perceived benefits can materialise. And finally, as this is unproven territory, the recommendation remains on proceeding with banking partner harmonisation discussions to ensure the optimum implementation outcome.