The path to perfect harmony » Banking Technology

The path to perfect harmony » Banking Technology

With widespread adoption of the ISO 20022 messaging standard announced for the many immediate payment initiatives under way internationally, you could be forgiven for thinking that the ‘standards wars’ have been won. The reality is that they are only just beginning.

In the past few years, ISO 20022 has certainly moved from being a technical issue to being a central component enabling new business services to be implemented, such as providing enriched data alongside basic transactional information. At the same time, there are other technical developments coming along, notably distributed ledger technology, that have the potential to change the way financial transactions are processed and also regulatory changes that affect where banks sit in the financial value chain. It is also worth bearing in mind that ISO 20022 is intended for use only in payments, securities, foreign exchange, trade services and cards operations. Many of the changes in working practices that institutions will have to make lie outside those domains.

In this latter category, the stand-out event is the implementation of the access to accounts (XS2A) requirements of the European Union’s second Payment Services Directive (PSD II). This will require banks to provide authorised third-party access to account information to enable competitive services and in some cases to initiate payments.

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