Corporate treasurers should view ISO 20022 integration as a business project rather than an IT process, says Rishikesh Tinaikar, Global Head of Corporates and Trade Go To Market at Swift.
Of course, the international standard for financial messaging that’s fast becoming the global language of payments has important IT components embodied in generating the messages and integrating it with banks, TMS providers and other payment systems.
In his role at Swift, Tinaikar works with banks, corporations and platform providers to ensure they can all tap the benefits of the new messaging standard to make international payments as frictionless as domestic transactions. He urges treasurers to view ISO 20022 integration primarily as a business project that uses data to create efficiencies and support liquidity and working capital management.
“When we speak to corporates, we say this is where they should be focused. We say start as early as possible by speaking to counterparties,, banks and providers, and internally looking at the data itself.”
Moreover, during this time of economic uncertainty, cash and liquidity management has never been so important for corporates. Corporates can use the rich ISO 20022 standard to tap into better reconciliation and improved straight through processing. ISO also aligns with key treasury trends around automation, APIs and real time treasury, he says.
In many ways, Tinaikar is encouraged by progress amongst corporates, driven in part by banks urging their clients to switch to the new standard. “While corporates don’t have a strict mandate to integrate ISO 20022, many of them understand the benefits in doing so. European corporates are very familiar with the standard with the SEPA requirement and we already have corporates sending ISO messages on Swift today,” he says.
Adoption by corporates is key to improving harmonisation in bank-to-corporate communication and to avoid fragmented and often bespoke communications between corporate and bank. It gets particularly complicated amongst corporates with multi-bank relationships and therefore multiple variations of the same standard, he continues. It’s a space where Swift is leaning in to lend support.
“We are playing a role to really try and harmonise bank-to-corporate communication by creating a universal standard,” he says, citing Swift initiatives around payments, cash reporting and other services specifically supporting corporate adoption of ISO. “Our job is to address that challenge and unlock the potential from a corporate perspective so they can see the benefit. We are helping them with that implementation,” he says.
The benefits
And the benefits are profound. Running off richer, uniform data, the new standard will mean different actors in a payments chain can process payments faster and with more efficiency. “ISO will help corporates around reconciliation, and richer data will help companies build cash flow forecasting models more accurately and support working capital management.”
Fast and efficient payments have an impact on the release of goods and payments, and a downstream impact on working capital, he continues. “Structured data unlocks a lot of those challenges and supports better liquidity management and cash flow forecasting.”
Swift is already enabling banks and financial institutions to offer different services that will ultimately be extended to corporates like new processes around the ability to track payments. With the introduction of a new model, banks can now offer tracking of payments to corporates to see the status of a payment, supporting liquidity management and forecasting. “ISO will make these benefits even richer for corporates,” he says.
Swift is now in the process of building more services under this model like the ability to cancel payments and payment preparation capabilities, he says. “The services already exist in the interbank space and our priority is now helping banks deploy it with corporates,” he concludes.
