Christian Westerhaus, Head of Cash Products, Cash Management, Deutsche Bank GTB

Deutsche Bank has launched a whitepaper on “Ultimate Guide to ISO 20022 migration” and hails the migration as one of the biggest changes in payments since SEPA.

According to Deutsche Bank’s whitepaper, the migration to ISO 20022 will provide for a better exchange through a variety of settlement networks. It will facilitate the transmission of qualitative payments data and bring about an efficient compliance process.

ISO 20022 is an ISO standard for electric data interchange between financial institutions. It describes a metadata repository containing descriptions of messages and business processes, and a maintenance process for the repository content. The standard covers financial information transferred between financial institutions that includes payment transactions, securities trading and settlement information, credit and debit card transactions and other financial information.

“Treating this as just another IT project would be a mistake – it is game-changing and signifies an opportunity for banks and corporates to improve operational efficiency and reassess existing business models,” says Christian Westerhaus, Head of Cash Products, Cash Management, Deutsche Bank GTB. “However, making the most of ISO 20022 requires a significant and complex migration, affecting not just core payments processing, but many other banking systems and departments.”

The whitepaper states that in the next five years, financial institutions including the Federal Reserve, The Clearing House in the US, Eurosystem, EBA Clearing in Europe and SWIFT will migrate to ISO 20022, thereby making the migration, a significant one.

“Given the effort required, it is understandable that some banks may look for shorter migration journeys. On the face of it, maintaining existing systems and converting existing formats into ISO 20022 or vice-versa, either at the inlet or outlet of the payments processing system, or at the interface, could make sense,” says Paula Roels, Head of Market Infrastructure & Industry Initiatives, Deutsche Bank. “But, not only do you risk losing information this way, you almost certainly miss a fantastic opportunity to improve efficiency and client service.”

The paper also suggests that CEO commitment and allocation of appropriate resources are instrumental in the ISO 20022 migration.

by Megha Bhattacharya
Market Analyst at IBS Intelligence
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