The Importance of Data Structure: ISO 20022 and the Future of Payments

14 15 The Importance of Data Structure: ISO 20022 and the Future of Payments Treasury and Trade Solutions The Role of ISO 20022 in Citi’s Payment Strategy ISO 20022 is at the core of Citi’s payments strategy. As an industry leader, we are committed to driving awareness of the benefits that ISO 20022 brings to all participants in the payments ecosystem. To that end, we are fully incorporating this data standard across our operations, service and technology ecosystem. Citi is working collaboratively across our organization on a strategy and execution roadmap to ensure that all areas of the bank are fully prepared for this change. We are also leveraging our close relationships with SWIFT as well as clearing systems in the US, Europe and across the globe, to stay informed on global implementation timelines and market updates. Citi has begun laying the groundwork for this migration internally. We have established global management and communication processes to ensure that teams have the training and support needed. Teams across Product, Operations, Technology, Service, Sales, Compliance, Risk and other areas have taken part in training, workshops, and seminars in order to understand the external and internal impact of ISO 20022 implementation. It is crucial for Citi to establish clear implementation guidelines for all employees, as all areas of the bank will be impacted by this migration, from front office to core infrastructure (such as interbank channels). Citi is developing and enabling shared utilities for accessing, validating, translating, and enriching structured ISO data. As part of its approach, Citi is rethinking its entire data framework in order to transition from legacy data formats towards a ISO 20022 data model. In doing this, Citi will capture and store new, rich data elements and present this data in real-time to customers, across multiple channels. In the long-term, the migration will streamline system and capability implementations as we will have a single core data model rather than multiple formats that require translation and convergence. In addition, we are ensuring we have data storage and processes in place to build analytics to derive insights and new services. To facilitate a safe and timely migration that meets external timelines, Citi has formed a cross-functional group to take a holistic and cohesive approach to supporting clients across all segments. Given the complexity of the migration over the next five years, it is critical to map out the impact across clients as well as payment data exchange standards. The Case for Community Adoption of Enhanced and Fully Structured Data As adoption of the ISO 20022 messaging standard proceeds, two approaches are being taken by major industry players. The first is a big bang implementation with a full move to ISO 20022; the second is a like- for like gradual transition. In a like-for-like migration there is a measured move of a specific sets of ISO 20022 data points, replacing existing formats. This type of migration allows an easy transition between legacy and the ISO 20022 format with no loss of data. It also gives institutions additional time to facilitate a complex technology migration. One risk of adopting a gradual like-for-like approach is that the large amounts of unstructured data facilitated by ISO 20022 can lead to increased rates of payment repairs and more frequent higher sanctions hit rates, thereby impacting STP rates. Moreover, a reliance on a like-for-like strategy will slow the industry transition to an ISO-native world. In addition, implementation of new ISO 20022 standards releases or upgrades will pose a challenge if adoption is fragmented. In order to reap the benefits of greater openness and interoperability, a move towards widespread community adoption of structured ISO 20022 data — where both senders and receivers are not only ISO-enabled but also adopt a fully structured ISO message — is necessary. Such an approach will not only promote end-to-end automation but will also help unify many existing standards. Ultimately, it will enhance customer service as a result of faster processing, improved reconciliation and greater openness and interoperability. To facilitate a safe and timely migration that meets external timelines, Citi has formed a cross-functional group to take a holistic and cohesive approach to supporting clients across all segments.