Regulation & Standards

ISO 20022: understanding the use cases for treasury

Published: Jan 2024
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Standard Chartered’s Richard Stansbury and Sunday Domingo discuss the industry shift to ISO 20022, the possible use cases corporate treasurers should be looking at, and how companies can prepare for the new standard.

ISO standard

The industry migration to ISO 20022 is underway and due to complete in 2025. But ISO 20022 isn’t a new topic – payment schemes like SEPA have been ISO-compliant for many years. And of course, banks are already working with many of their customers in ISO file formats today.

“The real change that has been taking place so far is in the bank-to-bank space,” says Richard Stansbury, Executive Director, Head of Payments Product Europe at Standard Chartered Bank. “If you’re sending EUR or GBP through CHAPS or through TARGET2, the bank-to-bank part of that transaction is now taking place on ISO.” He adds that the next step will be to “bring forth to corporate customers the innovations, the excitement and the enriched data that comes with ISO as we work towards the November 2025 timelines.”

The benefits of ISO 20022 are particularly valuable at a time when treasury teams are facing multiple headwinds, including a challenging geopolitical landscape and significant market volatility. As well as adapting to new ways of working, and embarking on digitisation initiatives, treasurers are also seeking to manage the risks associated with exceptional events. As Sunday Domingo, Head of Digital Platforms and Products at Standard Chartered Bank in Singapore, points out: “They don’t just need access to timely information – they also need to be able to respond rapidly and take action.”

Sunday Domingo quote

Use cases for ISO 20022

Against this backdrop, Standard Chartered is looking at how the data-driven insights supported by ISO 20022 can play a critical role in helping corporate clients make better decisions. For example, where cash flow forecasting is concerned, the bank is looking at ways of using predictive data analytics to help develop a new cash flow forecasting mechanism.

“In the 2022 Deloitte Global Corporate Treasury Survey, 60% of respondents said that poor quality of data is the number one challenge to improving the accuracy of cash flow forecasting,” comments Domingo. She notes that by capturing richer information, ISO 20022 presents an opportunity for treasurers to take advantage of descriptive and actionable data insights.

“We’re also very excited about the richer cash reporting formats that camt messages will provide,” Domingo adds. “These will accommodate enhanced, enriched data that can then be integrated into analytics solutions, either developed in-house by corporates themselves, or via their banking partners.” Other use cases include the use of payment network analytics to help treasurers increase the efficiency of their payments operations and reduce fraud risk.

At the same time, the ability to share balance and transaction information through APIs is helping treasurers improve their working capital decisions. “Together with the richer information that comes with ISO 20022, this will lead to a transformation in terms of how treasurers can manage their working capital,” comments Stansbury.

Adopting multi-bank connectivity

Standard Chartered’s larger multinational clients have been moving towards a strategy of centralisation, standardisation and automation, which tends to include standardising the company’s banking connectivity. With ERP providers such as SAP providing multi-bank connectivity solutions, and a new breed of fintech players connecting multiple ERP environments to multiple banking providers, corporates have more opportunities than ever to adopt multi-bank connectivity systems.

“As part of this, we want to encourage our clients to take the opportunity to move towards industry standard formats such as ISO 20022,” says Domingo. Alongside the other features of the new standard, she says corporates can also benefit from the unique end-to-end transaction reference (UETR), which enables banks and other providers to give corporates access to payment status tracking solutions.

“For example, we are looking to develop a new Straight2Bank quick serve solution that will allow our corporate clients to enable their staff or counterparties, who don’t necessarily have login access to Straight2Bank, the ability to query payment status by simply using the UETR,” she says. “This will provide faster query resolution and improves the overall payment tracking process.”

Richard Stansbury quote

Getting started with ISO 20022

When it comes to migrating to ISO 20022, Stansbury encourages treasurers to start conversations with their ERP and treasury management system providers as early as possible. He notes that the biggest change will be to move vendors from unstructured address information to more structured information, with vendors’ city and country information stored in separate fields.

“You may be doing that already, but if not, this could take quite some time to implement,” he says. “So start by taking a look at your vendor master files now, and making sure they are ready for structured addresses.”

Domingo adds that depending on the scope and complexity of their organisations, treasurers may want to invest not only in technology resources, but also in operational resources around testing and validation to support the shift to ISO. She concludes, “While it sounds like a lot of work and investment, we are very excited about the shift in the industry towards ISO – more and more, as we all know, data is the foundation of a digital transformation journey.”

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