- Patric Leone
- Product Owner, Connectivity, Fides
ISO 20022 isn’t just about compliance—it’s a chance for treasurers to elevate their operations. Now’s the time to leverage its power to streamline processes, cut costs, and turn treasury into a strategic driver, writes Patric Leone, Product Owner, Connectivity, Fides
Treasurers have been stuck in a quagmire of unstructured data, incompatible systems, and tedious manual processes for years. Managing payments across various banks and local clearing systems was like playing an endless game of Tetris, where the pieces never quite aligned without constant adjustment.
The result? Wasted time, rising costs, and a treasury department bogged down by non-value-added tasks. Finally, those days are numbered.
Enter ISO 20022 for payments and account statements, which promise to bring order amid the chaos and make data work for business. The Swift community has been migrating to the new standard for cross-border payments as well as account statements since August 2022.
Why legacy data was a nightmare
Before ISO 20022, handling payment and account statement data was a pain point in every way. Each system had its own quirky format, forcing treasurers to patch together data with custom mappings, conversions, and sheer willpower.
Account statements and respective payments had often to be manually reconciled. The introduction of XML payments and account statements through ISO 20022 brought some relief, particularly with PAIN.001 Version 3 (V3), which allowed for more standardised processing across local clearing systems and banks. But even then, it wasn’t all plain sailing. PAIN.001 V3 got the job done, but not without its share of headaches. Treasurers still had to wrestle with adjusting tags, applying workarounds, or converting data formats just to get different systems to co-operate.
This challenge was equally evident with account statements in the form of CAMT.053, which often struggled with harmonisation across various banks. While CAMT.053 improved visibility into transaction details and automated reconciliation, it required precise implementation to ensure that all fields were correctly populated and consistent across different jurisdictions. The result? More automation but still considerable manual intervention to ensure that the format and data matched the expectations of different ERP systems or TMS solutions.
As with payments, CAMT.053 was a step in the right direction but highlighted the need for further refinement and compatibility checks to truly unlock its potential as a tool for simplifying treasury operations.
Treasurers had to work around the system’s limitations, requiring time-consuming tweaks and constant vigilance to ensure everything fitted together. In this environment, data was seen as a necessary evil – something that had to be managed but offered little strategic value. The lack of standardisation meant treasurers spent more time troubleshooting and less time driving value for their organisations. Instead of being an enabler of efficiency, data often felt like a roadblock, forcing teams to focus on managing the mechanics of payment processing rather than driving strategic business outcomes. The burden of ensuring accuracy, compliance, and efficiency fell squarely on the treasury team, turning a straightforward process into a complex, resource-draining endevour.
FIG 1: Benefits of ISO 20022 Structured Elements
The game-changer
Then came ISO 20022 and the updated PAIN.001 Version 9 (V9) and CAMT.053 format. Suddenly, everything changed. This wasn’t just another version; this was the upgrade everyone had been waiting for. With structured data elements such as addresses, remittance information, and Legal Entity Identifiers (LEIs) now built into the format, treasurers can align cross-bank and cross-system operations seamlessly. No more fiddling about with custom mappings or fighting to align disparate processes. Everything just works.
However, it’s not just about the format. With Swift introducing FINplus, the industry is being steered towards unified adoption of ISO 20022. FINplus is leading the way with the new PAIN.001 and CAMT.053 standards, setting the benchmark for Cross-Border Payments and Reporting Plus (CBPR+) and beyond. The real impact will be felt when industry-specific banks and corporates adopt the same versioning globally, aligning all channels to the Common Global Implementation (CGI) format. The result? A treasury operation that is not only compliant but also cutting-edge.
Real-world impact
- Reconciliation that practically does itself
In the old days of reconciling payments, the process was tedious and error-prone, often like trying to piece together a puzzle with missing parts. With the latest version of PAIN.001, those days are over. The format supports up to 9,000 characters of structured remittance information, ensuring every detail is captured and passed on to CAMT.053 reports.The impact? Systems can now automatically match payments to invoices with surgical precision, slashing DSO and speeding up cash application. Moreover, the structured data elements in CAMT.053 reports provide unprecedented transparency and detail. - Centralised treasury operations with vIBANs and OBO
Managing multiple subsidiaries or business units used to involve juggling numerous physical bank accounts, each with its own fees and reconciliation snags. With PAIN.001’s support for virtual IBANs (vIBANs) and on-behalf-of (OBO) payments, those drawbacks belong in the past. Now, all entities can be managed under a single physical account, with each one assigned its own vIBAN.
The OBO element takes it a step further by clearly identifying the ultimate debtor and creditor in each transaction. This means treasurers can track and report financial activity with pinpoint accuracy, reducing errors and simplifying reconciliation. It is like having a GPS for a corporate’s funds. - Automated compliance
Compliance is critical but it’s also a massive time-sponge. ISO 20022 changes that by automating many of the tasks that once required endless manual checks. Take sanction screenings, for example. The structured data in PAIN.001 means banks can automatically verify the creditor’s country using the code in structured addresses. This drastically reduces false positives, freeing up the treasury team to focus on strategic initiatives rather than endless alerts. - Forecasting with granular precision
While reconciliation and compliance are essential, the real magic happens when PAIN.001 is used to elevate cash flow forecasting. By integrating structured purpose codes and LEIs into payment data, a level of cash flow granularity is achieved that was previously unattainable. Treasury teams can see how much cash is tied to specific business units or transaction types in real-time, with pinpoint accuracy.
But it doesn’t stop there. Pair these insights with advanced analytics and AI, and a treasury function can predict cash flows, detect payment anomalies, and optimise liquidity management almost without breaking its stride. The structured data provided by PAIN.001 is not just about compliance, it’s about transforming treasury into a proactive, data-driven powerhouse.
Imagine a world where treasury is not just reacting to financial data but actively shaping the company’s financial strategy. That’s the power of leveraging structured data through ISO 20022, combined with AI-driven insights.
The full potential: PAIN.001 and CAMT.053
The real power of ISO 20022 shines when PAIN.001 is paired with CAMT.053. The structured data sent in a payment instruction isn’t a one-way street, it’s fully mirrored in the CAMT.053 reports received from the bank. This creates a closed-loop system where every transaction is tracked from initiation to final reconciliation with complete transparency.
The benefits? More accurate cash flow forecasting, improved liquidity management, and real-time insights that enable informed, on-the-fly decision-making. It’s not just about processing payments, it’s about transforming treasury operations at every level.
Don’t just keep up – lead the charge
The global roll-out of ISO 20022 and the introduction of the updated PAIN.001 and CAMT.053/52 format is a game-changer for the payments industry. For treasurers, these advancements aren’t merely about meeting regulatory requirements; they’re an opportunity to streamline operations, cut costs, and unlock new efficiencies. While previous versions, including PAIN.001 V3 or CAMT.053 V2, fulfilled a function, they were really only ‘good enough’. Now it will be possible to fully unleash the potential of a corporate’s data.
With Swift’s FINplus at the forefront, EBICS 3.0 not only supports but also offers these new formats, along with industry-wide alignment on the (CGI) format, making now the ideal time to upgrade from legacy systems to XML.
The key message is: don’t let data be a burden. Turn it into the strategic asset it was always meant to be. And treasury is the function that is poised to lead the charge.
