Celent: The road to ISO 20022 migration
29 June 2022 UK
Image: Sikov/adobe.stock.com
47 per cent of banks say they strongly agree that technology constraints within the bank limit their ability to do more with their migration to ISO 20022, according to a payments survey by Celent.
In the survey focused on the European banking industry, Celent interviewed 51 banks from 11 countries, with the majority of banks based in the six largest payments markets — France, Germany, Italy, Netherlands, Spain and the UK.
The survey also investigated the impact of the COVID-19 pandemic on banks’ IT budgets, with a massive 71 per cent reporting that spending was put on hold at some point during the pandemic. Of this, 37 per cent say that when spending resumed, priorities had changed, while 16 per cent say budgets remained on hold.
Celent highlights that this presented concerns, as banks were already struggling to meet the ISO 20022 deadlines, and this created a backlog of work with less time to deliver. Other pressures on banks’ plans include the global decline in cash management revenues in 2020.
A further 42 per cent of respondents say they agree that budget or resource constraints limit their ability to do more with their ISO 20022 migration.
Discussing the drivers for payments infrastructure investments in 2020 and 2021, 72 per cent of respondents say spending methods were directly influenced by the pandemic, such as a shift to electronic payments and away from cash and cheques.
More than half cite regulatory changes and cost reduction as a key focus (60 per cent and 55 per cent respectively), with only 36 per cent saying customer expectations and requirements impacted their payments infrastructure investments.
In Europe, 45 per cent of low-value and instant payments say they already use ISO 20022 in their home market, compared to a similar 47 per cent of real-time gross settlement, wire and SWIFT payments.
In addition, one-third of the latter types of payments, firms say they are currently working towards the migration, or have only done the minimum required.
Celent notes that this is somewhat in contrast to the expectation that European banks would find the migration to ISO 20022 easier, given that the institutions adopted the standard for Single Euro Payments Area payments more than a decade ago.
Looking forward to the next five years, most banks say they expect to look for a partner to either deliver a managed payments service, or to fully manage payments on their behalf.
Following the results of the survey, Celent anticipates that the majority of banks will do just enough and be largely on time for the deadline.
With the industry at a critical point in the migration, Celent highlights the importance of banks conducting a detailed, honest review of the stage they are at so regulators and partners can understand their risks.
This includes a broad review of what banks have done so far to be compliant, considering whether solutions are future-proofed, or simply implementing a point solution that moves the problem into the future.
Celent concludes by outlining that cloud solutions mean banks can utilise application programming interfaces both internally and externally to build a path to compliance, as well as to deliver the agility and flexibility needed by cash- and resource-strapped banks to meet their migration targets.
In the survey focused on the European banking industry, Celent interviewed 51 banks from 11 countries, with the majority of banks based in the six largest payments markets — France, Germany, Italy, Netherlands, Spain and the UK.
The survey also investigated the impact of the COVID-19 pandemic on banks’ IT budgets, with a massive 71 per cent reporting that spending was put on hold at some point during the pandemic. Of this, 37 per cent say that when spending resumed, priorities had changed, while 16 per cent say budgets remained on hold.
Celent highlights that this presented concerns, as banks were already struggling to meet the ISO 20022 deadlines, and this created a backlog of work with less time to deliver. Other pressures on banks’ plans include the global decline in cash management revenues in 2020.
A further 42 per cent of respondents say they agree that budget or resource constraints limit their ability to do more with their ISO 20022 migration.
Discussing the drivers for payments infrastructure investments in 2020 and 2021, 72 per cent of respondents say spending methods were directly influenced by the pandemic, such as a shift to electronic payments and away from cash and cheques.
More than half cite regulatory changes and cost reduction as a key focus (60 per cent and 55 per cent respectively), with only 36 per cent saying customer expectations and requirements impacted their payments infrastructure investments.
In Europe, 45 per cent of low-value and instant payments say they already use ISO 20022 in their home market, compared to a similar 47 per cent of real-time gross settlement, wire and SWIFT payments.
In addition, one-third of the latter types of payments, firms say they are currently working towards the migration, or have only done the minimum required.
Celent notes that this is somewhat in contrast to the expectation that European banks would find the migration to ISO 20022 easier, given that the institutions adopted the standard for Single Euro Payments Area payments more than a decade ago.
Looking forward to the next five years, most banks say they expect to look for a partner to either deliver a managed payments service, or to fully manage payments on their behalf.
Following the results of the survey, Celent anticipates that the majority of banks will do just enough and be largely on time for the deadline.
With the industry at a critical point in the migration, Celent highlights the importance of banks conducting a detailed, honest review of the stage they are at so regulators and partners can understand their risks.
This includes a broad review of what banks have done so far to be compliant, considering whether solutions are future-proofed, or simply implementing a point solution that moves the problem into the future.
Celent concludes by outlining that cloud solutions mean banks can utilise application programming interfaces both internally and externally to build a path to compliance, as well as to deliver the agility and flexibility needed by cash- and resource-strapped banks to meet their migration targets.
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