Journey to ISO 20022 compliance

Use case: ABC Logistics

Background
ABC Logistics is a mid-sized company specializing in supply chain management and logistic services. They handle numerous international transactions daily, requiring effective communication with banks across multiple countries.

Situation
Before adopting ISO 20022, ABC Logistics faced challenges in reconciling payments due to inconsistent data formats and incomplete transaction details. This often led to delays in processing and difficulty in forecasting financial positions.

Solution with ISO 20022
After adopting ISO 20022, ABC Logistics started receiving more structured and detailed messages from their banking partners. The standardization allowed their systems to automatically process and analyze data from payment messages, which included much more details about the transaction, such as unlimited remittance data.

Outcome
With enhanced data quality and analytics, ABC Logistics was able to better understand payment patterns, identify trends, and make more informed decisions. The ability to analyze data across different markets enabled them to tailor services that meet customer needs more effectively, resulting in improved customer satisfaction and increased revenue.

Use case: 123 Investments

Background
123 Investments is an investment firm that frequently engages in high-value transactions and relies heavily on SWIFT.

Situation
The firm previously struggled with high costs and risks associated with maintaining multiple legacy systems for international transactions. The lack of standardization led to frequent errors and non-compliance issues, which were costly to rectify.

Solution with ISO 20022
After adopting ISO 20022, 123 Investments was able to streamline their payment systems into a single, unified standard. This transition decreased the reliance on outdated systems.

Outcome
The standardization format of ISO 20022 reduced operational risks by ensuring greater accuracy in transactions and compliance with international regulations. It also reduced maintenance costs as the need for manual intervention decreased.

ISO 20022 and SWIFT MT messages differ in their terminology and structure. Here are a few key differences to know.

Terminology changes – Here are some key terms used in legacy MT messages and their corresponding terms in ISO 20022.

• MT “Beneficiary” is equivalent to ISO 20022 “Creditor”
• MT “Beneficiary’s Bank” is equivalent to ISO 20022 “Creditor’s Agent”
• MT “Ordering Customer” is equivalent to ISO 20022 “Debtor”
• MT “Ordering Customer’s Bank” is equivalent to ISO 20022 “Debtor’s Agent”

Stucture changes - One major change from the MT to ISO 20022 is the structure of the address. MT allows for unstructured address formats, while ISO 20022 allows for structured address formats. Here's an example.