Matt Sarkar, Global Head of Marketing for valantic FSA, outlines what a low-code approach to migration could mean for financial institutions.
By 2025, ISO 20022 will be the universal standard for high or large-value payment systems of all reserve currencies. In Europe, SWIFT and the European Central Bank have announced ISO 20022 go-live dates of March 2023. This standard has a significant role to play in the future of payments by embedding enriched data and offering extensible messaging with the potential to interoperate between in country and international schemes. But with domestic and cross-border mandates on banks to adopt ISO 20022, and timelines fast approaching, financial institutions have a lot to grapple with in terms of managing the impact of ISO 20022 deadlines and leveraging the value of the new standard. For many, it will be a complex migration.
Not all legacy systems within a financial institution will be able to manage ISO 20022 messages, nor will they require the additional information that the standard can provide. However, many of these systems provide data that can be incorporated into the rich ISO 20022 messages to enable high-value services for customers, centered on transparency.
Many banks, financial institutions and payment service providers have taken the decision to include ISO 20022 adoption as part of ongoing investments in modernizing legacy systems across their data estate. Including ISO 20022 as part of a broader strategy in this way not only creates paths for financial services organizations to convert to the new standard, but also lets them assess how to unlock the value of new, higher quality payments data. This provides opportunities for more transparency, more automation, and new services – all fueled by the richer intelligence encased in the ISO 20022 format. And the benefits extend far beyond compliance.
But even if banks choose to make tactical decisions about which peripheral systems to connect to their ISO-native engine, they must approach the migration with a strategic mindset. It does not have to be a large-scale, rip-and-replace project. A carefully orchestrated porting plan – from legacy applications to modernized engines – can mitigate compliance risk while opening the doors to innovation and growth. But, as Gareth Lodge, a member of the payments team at industry research firm, Celent, recently observed, now is the time for focus. “FIs really need to double down on their ISO 20022 project because that deadline is looming fast and FIs are swapping vendors even at this late stage in the game,” he said.
Undergoing digital transformation projects is a multi-faceted journey, and there is no single tool or approach that will automatically make transformation a reality. However, low-code/no-code platforms like valantic FSA’s X-Gen can play a pivotal role.
X-Gen is a modular and scalable visual modelling, low-code development platform that’s built for building scalable, resilient, performant, and secure business and technical solutions. It addresses the complex challenges of ISO 20022 migration programs (data transformation and data truncation) without impacting existing systems and offers an accelerated pathway to becoming fully ISO 20022-native.
By working with providers that can offer such iterative solutions, banks can give themselves the freedom to move towards their ideal solution while meeting deadlines along the way – without the pressure of costly failure looming over them.
Whatever their approach, the outcome should be focused on the use of more granular data resulting in richer services, unlocking innovation, and enabling greater collaboration across the banking industry. The net result for financial institutions will be higher customer satisfaction and value, lower risk, and more efficient, streamlined operations.