July 2018 – The successful introduction of ISO 20022 for corporate users marked an important milestone in the harmonization of payment traffic. By the end of June around 80% of corporate users were submitting their payments on the basis of the new technology standard. As a survey of banks conducted by SIX Interbank Clearing AG showed, 80% of transaction volume had also been migrated. In recent months there has been a rapid and continuous increase in the number of users making the changeover – a message also underscored by a representative survey of companies, administrative bodies, and associations conducted by gfs.bern in April 2018 on behalf of the financial industry, which indicated that 90% of the organizations polled had already launched a project. The Swiss financial industry anticipates that with the help of their banks, all corporate users will have changed their accounting software over to ISO 20022 by the end of the year. ISO 20022 will close gaps in the information flow; in other words, it will be possible to transmit payment information digitally all the way from the party initiating payment to the recipient’s accounting software, making the entire payment transfer system more economically efficient. Not only that, but ISO 20022 serves as the basis for the QR-bill. The QR-bill will further accelerate the digital transformation of payment traffic and create an important bridge with paper-based payments, which are still widespread among the public and will have to be supported.
Information and Advice Key to Success
According to the survey by gfs.bern, the successful changeover is due to a large extent to the performance benefits of ISO 20022 and the work done by banks and software companies to provide information. In recent months they have actively supported their clients with information and advice. Around 70% of the organizations affected received guidance from an external partner, with 90% receiving information from their bank and saying they were fairly or even very satisfied with this support. Given these high figures, the assistance and information provided by banks and software providers can be seen as a key success factor in an infrastructure project of this scale.
Performance Benefits Hit the Mark
In the last few months ISO 20022 has established itself as an important basis for optimizing key financial processes. Sixty percent of organizations see benefits in connection with the standardization of payment traffic. This figure increases to well over 70% the more frequently and regularly they make payments and the further along the changeover process they are. The most frequently cited benefits included less susceptibility to error thanks to the use of IBAN, the digitization of business processes, and more straightforward domestic and cross-border payments. This suggests that ISO 20022 is proving its worth in practice.
Leap in Digital Transformation Acknowledged
A similar picture presents itself when it comes to digital transformation potential. Around 80% of organizations that make payments more than once a day clearly see the step forward in digital transformation made possible by harmonization. The figure for those still in the process of making the switch is around 70%, dropping to 50% for organizations that still have not initiated a changeover project. What is striking about all the survey findings is that organizations with growing everyday experience perceive the benefits more clearly than those that have just launched a project or handle smaller volumes of invoices.
Closing Gaps in the Changeover
Communicating positive survey findings and experience is thus a way of driving the changeover further forward. It is hugely important for all corporate users to have completed the switch to ISO 20022 by the end of 2018. It is crucial to meet this deadline because as of the beginning of July 2018 the existing DTA standard has no longer been supported, developed, or documented by SIX. Anyone still working with DTA can assume that payment orders will no longer be accepted by financial institutions and that there will be more manual work and time lost. Each bank is responsible for making sure its corporate clients have caught up in terms of migration by the deadline. If the changeover has not been made across the board, it will not be possible to implement the QR-bill, which is already recognized as a major component of the entire harmonization process.
High Expectations of the QR-bill
Seventy percent of organizations polled have heard of the QR-bill, with around 60% already seeing only or primarily benefits in the QR-bill before its introduction. These benefits include lower susceptibility to error coupled with greater efficiency and more straightforward payments via mobile devices. Around one third have not yet formed an opinion, and only 10% believe there are disadvantages, such as a lack of user-friendliness for certain groups of people, the costs of switching, or problems with reading the QR code.
The positive attitude reinforces the Swiss financial industry’s intention of implementing the QR-bill on a solid basis and incorporating valuable but thus far isolated feedback from the market in the next phase. For this purpose a public consultation process will be held in August up to the end of September, with the outcome communicated in fall 2018. This procedure will ensure that market participants have an equal opportunity to voice their views, and will allow the QR-bill to be implemented successfully because it has broad support. Software providers and banks have already been working for some time to develop scanning and processing solutions.
A General Boost to the Digitization of Switzerland
The widespread and timely changeover to ISO 20022 has been possible because corporate users, software providers, and banks have worked together in partnership. The introduction of the new standard marks an important milestone in the harmonization of payment traffic. Survey findings confirm that the Swiss financial industry’s goal of increasing the level of digitization meets a market need. ISO 20022 and the QR-bill are milestones on the way to seamlessly digitizing the billing and payment process end to end with eBill. Payment traffic is in the midst of a digital transformation in a process led actively by the financial industry and designed and implemented responsibly to take account of all sections of the public.