Next to various Instant Payments projects, currently the biggest challenge in the payments industry is the migration of SWIFT and TARGET towards ISO 20022 standard called shortly SWIFT MX migration. Here is the original migration plan:
The COVID19-related pandemic situation postponed these plans in general by 1 year, but nevertheless, moving from SWIFT FIN standard deeply embedded in all core systems to ISO 20022 based XML payments formats seems to be a dramatic change for many payment institutions going deeply into the banking system structure. There are, for sure, many ways to resolve this issue, but is there an easy and fast to implement solution reducing the project complexity and risk?
The simplest generic approach is to go for a converter-based solution similarly to the time limited offering from SWIFT. This is relatively easy and quick to implement solution, but it includes some limitations, especially related to the potential data loss on the incoming side due the format differences between SWIFT FIN and MX formats. Another limitation for the outgoing direction is the missing option to use the new possibilities of the XML format. So, is there any way to mitigate these limitations and still have an easy and fast to implement solution?
We believe implementing of our PTS Payment Hub represents such type of solution. MS Windows Application Server based solution doesn’t require any heavy infrastructure and utilizes resources being already available in the payment institution. The data model used is inspired by ISO20022, so handling of SWIFT MX formats is absolutely natural and without issues. Moreover, the solution contains also integrated converting capabilities, so conversion from any old or specific electronic message format to XML can be an integral part of the payment processing workflow. The full support for XML formats gives the user full compatibility with external systems, complete transaction data set available and time flexibility for transporting the new standards to internal systems at later point in time.
Flexible integration options make it easy to connect to existing systems and wide parametrisation gives the user many options to adjust the processing to his needs. The modular structure of the solution allows flexible phasing of the project, so the delivery risk can be reduced by step-by-step implementation. And the typical implementation time from 6 to 12 months is fast enough to achieve the required dates.
Finally, our maintenance approach guarantees users regular updates and adjustments according to the requirements of regulators without additional costs. The regular SWIFT, SEPA or local clearing changes are covered within the standard maintenance service, so even adoption to potential format changes in the future is already covered. All in all, moving SWIFT and TARGET to ISO20022 is really no problem.