But hang on a moment. Didn’t we just spend 14 years getting SEPA in place using ISO 20022 standards? And don’t I continue to hear corporates saying that the standards have done nothing to really solve their problems?
We seemed to get stuck on the question of whether we should use ISO 20022. Of course we should. What is there to debate about that? But that’s not the real question, the real question has to be ‘what do we want the standards to do for us?’
I heard people saying that we can re-use what we did in SEPA. Well, not quite. Not least of all because SEPA is a batch model, and that’s not going to work quite the same way for immediate payments. And then there is the question of versions. Not many people spoke about that. SEPA is on version 2 of the ISO 20022 pain and pacs standards, whilst Target2 is implementing version 4, with probably EBA to follow with version 4 also, or perhaps even version 5. And you can bet any money you like (if you’re that way inclined) that when the time comes to upgrade versions, then they won’t all move at once, or follow the same rules. But that’s not a major issue and can be resolved, but disintermediating versions from the ultimate business. Yes, let’s use ISO 20022.
By doing so we can think globally and enable software solutions not just fit one country, but fit for any country that wants to have this type of payment, and this is exactly what the ISO 20022 RMG has recently agreed to do by establishing a Real Time Payments sub group under ISO 20022 governance. Anyone going a different route is going to find banks less willing to invest in their proprietary format (UK Faster Payments might just get away with it a little longer because the money is already spent). We’re ready to move on from that decision. Let the technology worry about versions—new and old.
Now we need to think about the business. The standards version is our tool to deliver that. It should not be the primary decision as to ‘what can I do now.’ We must embrace what we want up front, push the boundaries, change the standard if needed.
But more than anything, we need to do it now. We must move forward immediately, because whilst we’re studying which version of which format to use, others are deciding which customers they are going to take from the banks first.