Is
there a business case for ISO 20022?
There
is plenty of noise being generated in the industry about ISO 20022 but is there a convincing business case for financial services
firms? For many firms the implementation of ISO 15022 was the culmination of the industries development for a new message
standard so the trumpeting of ISO 20022 is hardly a welcome sound. Despite SWIFT and FIX and umpteen other organisations keen
on developing new standards it is doubtful that those responsible for development budgets will be on board unless they know
what the benefits are.
The
trouble with ISO anything is that to most people it means yet another electronic message that replaces the previous. However,
ISO 20022 is something completely different.
ISO
20022 is a XML based message and offers far more flexibility in its construction and how it can be used as an electronic language.
Where ISO 15022 had constructed fields, which needed population, ISO 20022 is able to make use of words in a more open construction.
XML
is one of the earliest electronic languages and has been used globally in many different industries to do many different things
but for financial services it has been constrained until now that is. ISO 20022 is an industry initiative to bring forward
financial services to levels enjoyed in other industries.
Dick
Hales, senior standards analyst for B.I.S.S. Research and long term member of the UK Technical Standards Committee, has strong
views on the development of ISO 20022 and says “with ISO 20022, there will be leaders and followers, frontrunners and
bystanders. Any of these extremes and any stop in between could be a legitimate stance, as long as it is chosen
rationally within a coherent business-driven ICT strategy. Different types of business in different market areas
have different needs that ISO 20022 may or may not satisfy in the next 3 to 5 years. Positioning is all and choosing
the optimum time to move forward with ISO 20022 will determine cost-effectiveness."
peterevans is a software company that invests heavily in researching new industry trends and maintains a constant watch on new technology
that could benefit its customers. With some of the industries most high profile firms as clients, peterevans maintains a cutting
edge approach to developments and they will be instrumental in producing an ISO 20022 solution that may be one of the first
to market. As such they are well placed to provide an opinion on the potential business value of ISO 20022. The CEO of peterevans is Dr Mike Foley and he is fully aware of the industry push for ISO 20022 but understands that the benefits need to be clearly
laid out to clients to gain their support. He says “Broadly speaking ISO 20022 has met a lukewarm response as participants
struggle to see the business benefits having invested heavily in ISO 15022. Clearly
there are a number of advantages to the flexibility of ISO 20022, but for it to be a success, users must start planning for
a smooth implementation, and before they commit they want to have a clear outline of how the benefits will be reflected in
their investment. ”
This
experience is likely to be similar across the industry as the limited detailed knowledge and appreciation of ISO 2022 will
cause a lack of demand.
It
would seem sensible for SWIFT and others to first establish the business case for ISO 20022 before embarking on a project
that will simply fall flat, once financial services firms are required to set budgets and take part.
Many
firms have said that they think of ISO 20022 as some sort of ISO 15022 upgrade and are completely oblivious to the intentions
of SWIFT and other bodies involved in standards. This does not bode well for the industry taking up ISO 20022 and will make
the task of change that much more difficult.
What’s
required today is a business case for ISO 20022 that establishes what business benefits can accrue and what the costs might
be. Anything less looks like making ISO 20022 a very difficult birth and one unlikely to be welcomed by the industry at large.
By
Gary Wright, M.S.I.
