SWIFT (Society for Worldwide Interbank Financial
Telecommunication) has released a new discussion paper on the use of the financial
messaging standard, ISO 20022, for unifying FinTech.
technologies have been proliferating in the last decade and are already
transforming conventional banking systems as FinTechs and banks are working
together to co-create the financial landscape of tomorrow. However, in the
absence of adoption of common standards, the use of divergent technologies
could lead to inefficient and ineffective fragmentation.
ISO 20022 is the
universal financial industry message scheme developed in 2004 under the ISO
Financial Services Technical Committee 68 (TC68). Since its inception, it has
resulted in extensive adoption across market infrastructures, financial
institutions and corporations.
Registration Authority for ISO 20022, is working closely with the industry
globally to standardise messaging and best practices. The discussion
paper captured the opinions on
the use of the standard in the context of established technologies such as RTGS
and CSD systems, as well as new technological innovations such as contactless
and mobile protocols, DLT (Distributed Ledger Technology) and APIs (Application
The paper says that there are currently over two hundred and
twenty ISO 20022 standards adoption initiatives in the global financial
services industry. Over half of these are operating in a live capacity. There are
more than twenty cases of ISO 20022-based financial market infrastructures in
production mode in Asia, encompassing stock exchanges and central securities
depositories (CSDs) in Singapore, Australia and Japan as well as real-time
payment and settlement systems in India, China and the broader ASEAN region.
discussion paper lists a number of benefits of ISO 20022 for FinTech innovation
and says that it facilitates global interoperability. An open and collaborative
standard, ISO 20022 can be used by any organisation and messages designed in a
collaborative way. It provides the means to achieve uniform and unambiguous
interpretation of the data exchanged among users, regardless of the technology
used. The paper also says that the
standard has a rich and proven data model and its repository contains reusable
concepts and data components.
The paper clarifies that that it is not suggesting that
FinTechs need to work directly together or to obtain funding from this
ecosystem. Rather, the optimal way for a FinTech solution to be adopted would
be to display interoperability by leveraging the use of ISO 20022 standards for
notes the launch of the new Fast Track Maintenance Process in August
2017, due to which ISO 20022 can provide increased value in tune with
fast-paced FinTech developments. Contrary to the current yearly maintenance
cycle of ISO 20022 standards which typically spans three quarters’ of a year,
this new accelerated process can be initiated at any time and may be reduced to
as little as three months.
The paper also talks about the future evolution of ISO 20022
standards. Currently, the business layer of ISO 20022 standards are reusable.
More work is being undertaken on the logical layer of ISO 20022 standards that
define logical message definitions and the technical layer that defines
physical syntax to optimally generate timely outputs in any required syntax.
For example, while the ISO 20022 data models were created based on a messaging
paradigm, their expansion must include concepts from DLT, such as read and
In the areas of new addressing capabilities for real-time
payments, ISO 20022 adoption is still evolving at the edges. This is giving
rise to ISO 20022 recognising and incorporating concepts from compatible
technologies to meet certain needs for realtime data processing in financial
markets. The first ISO 20022 compliant API Resources are being developed and
are estimated to be published by the Registration Authority around the change
of year. Finally, the paper states that since a number of FinTech innovations
focus on financial inclusion which remains low in many parts of Asia Pacific,
ISO 20022 standards will have to evolve to support more financial services for
retail and small enterprise levels, such as mobile payments, crowd funding,
Islamic finance to name a few.