- Neil Ainger
- Freelance Journalist & Treasury Writer
The Sibos 2023 conference, organised by Swift, attracted thousands of decision-makers from across financial services to the Metro Toronto Convention Centre in Canada on 18-21 September. TMI contributor, Neil Ainger, highlights the main talking points from a corporate treasury session on Day three that looked at standardisation and data.
The “voice of the customer”, as Swift’s Head of Payment Products, Sebastian Rojas, referred to the treasurers at Delta Airlines and Great Gulf on the conference session panel he was moderating, was heard loud and clear in a debate about How FIs can Drive More Value to Corporates.
However, the “voice” wasn’t always complimentary. Najeemdeen Dayisi, Director of Global Payment Strategy and Treasury Technology, Delta Airlines, bemoaned the fact that too often discussions with banks “were about new products” that merely encouraged unwanted “fragmentation”.
There is, he lamented, “no standardisation”. This applies if a treasurer wants a common approach to API usage as a means of co-creation or enhanced data exchange and easy connectivity to data-rich services, such as aggregated payment processing.
It’s the same with universal ISO 20022 adoption – standardisation is lacking. “There are 14 different ways of executing ISO 20022 with different proprietary fields [at each bank],” continued Dayisi. He cited his recent experiences at Delta, a multinational firm that spans numerous borders, regions and banking norms, which encounters many different levels of technological capabilities in its payment partners.
“If everyone had the same ISO 20022 standardised format, I could spend my money on one single thing,” he pointed out. This, he noted, would help to avoid fragmentation costs and maximise the benefits he could achieve through his limited treasury budget.
As cash management increasingly automates, benefits could accrue from focusing on data more, in order to aid treasuries to become a true service centre, and not just a cash management function. This approach could help:
- Procurement to know where a payment is, or marketing to have the required resources in place before a growth drive.
- Treasuries to reduce fraud and focus more on risk mitigation in other areas such as FX and interest rate swings through being able to pre-verify data.
Of course, this data-centric approach is reliant on good data management and standardisation. The latter is evident on the ISO 20022 adherent cross-border payments and reporting-plus (CBPR+) flows that have already commenced and on the Swift gpi quasi standard, which encourages speed and data-rich interoperability across instant payment platforms. Common API approaches, as evident in the UK with its Open Banking standard, would also be beneficial if they are achievable globally. As Delta’s Dayisi said: “We need a standard approach to APIs.”
The data-centric operational model of the future is helped by these standardisation drives. Standards lead to greater automation and ultimately more accessible data that treasuries have time to utilise. ISO 20022 messages, for instance, have more characters in them – and therefore capacity to carry more information – than older messaging formats.
ISO 20022 adoption
“Standardisation is so important,” Nasreen Somani, Treasurer, Great Gulf commented. “I’d rather spend my time and effort on core business needs, not addressing fragmentation.” Indeed, it is so important, that she went on to say: “If a bank doesn’t have ISO 20022, we’re not coming to you.”
According to Somani, standardisation helps treasuries with:
- Implementation and operations: “As non-standard formats take up a lot of time and are very resource-intensive.”
- Reducing errors: “As my treasury team doesn’t have to intervene so much” in a standardised environment.
Cross-border payment challenges emanating from activities such as requests for information (RFIs) and sanctions screening adversely “impact the entire operational chain”, added Somani. They can be reduced by increasing standardisation and data provision and services from the banks.
However, a data-centric approach to treasury and risk management does require corporate treasuries to invest. After all, data is only as good as how it is digested and used.
Collaboration is key
The best approach towards this nirvana, which everyone wants of standardised automated approaches enabling data-centric frictionless payments and operations, is via collaboration. “Swift has a role to play in bringing this about,” said Delta’s Dayisi. As indeed does the corporate treasury community, by engaging constructively with its banks and finding out what is possible.
Tellingly, the 2023 Sibos conference theme was “collaborative finance in a fragmented world”. Living up to it means “providing ready-made services”, said Rojas, outlining Swift’s extensions to its FINplus for corporates service, the roll-out of various transaction and pre-validation tools, and gpi-driven cross-border payment interoperability options.
In Rojas’ opinion, the combination of a unique payment acquisition standard, upfront data-quality checks, and embedded value-added capabilities, will accelerate the time to market of new ISO 20022-rich propositions from the global banks, which should help corporates. “Our strategy is to uplift services,” he added, “not to get more corportes to connect to Swift.”
In praise of SEPA
“Banks have had to make big investments recently in new standard formats and [instant payment] rails. But these are only useful if they lead to data-rich use cases at corporates,” said Bruno Mellado, Head of Payments and Receivables, BNP Paribas, as he supported the need to talk and collaborate.
The SEPA project – with its confirmed end date for ISO 20022 adoption, and migration towards instant payment platforms – was instrumental in helping Europe move towards more modern systems, added Mellado while admitting the rich data flows expected didn’t initially materialise as quickly as expected – something since rectified.
The pros and cons of pre-validation
Also presenting the banking industry’s viewpoint was Tom Durkin, Managing Director, Global Product Head of CashPro, Bank of America. He has spotted a shift towards the very front-end of the payment chain. “In a real-time payment [RTP] world, the priority is to get pre-validation tools in first,” he said, adding this upended more traditional origination and “rainy day” exceptions-handling approaches. As the cash reporting benefits of ISO 20022 accrue, the case needs to be made now for pre-validation end-uses and investments directed towards this area as the next priority.
Great Gulf’s Somani agreed with this industry shift, stating that pre-validation means treasurers are now “like a detective trying to check everything before a payment goes out”. She is in favour of the shift underway, noting that as “pre-validation gives us more control on the front-end, it doesn’t leave us with back-end problems”.
Without effective data tools, ISO 20022 standardisation – or indeed any of the other standards efforts underway – cannot deliver their full potential. “There is homework to do for banks and Corporates" concluded BNP Paribas’ Mellado as he called for investment in implementation of the ISO standards that can help create new frictionless payments services.
“Innovation is great. New capabilities are great,” concurred Delta’s Dayisi. “But the value is diluted if complexity makes implementation difficult.” That is why collaboration is vital to build on a standardised approach. Competition will increasingly be in the services, not the infrastructure layer, in the data-rich future that awaits.
