Daily Fedwire Transactions Worth $1.4 Trillion Handled by Volante Technologies, Accounting for over 30% of the Entire System's Value
The shift towards ISO 20022 as the global messaging standard for cross-border payments is gaining momentum, and for good reason. This standard offers significant advantages over traditional translation-based approaches, which convert messages between legacy and ISO formats.
The Benefits of Full ISO 20022 Adoption
By fully adopting ISO 20022, financial institutions can reap a host of benefits. These include:
- Richer, structured, and more granular data: The standard's data-rich messages enable better automation, reconciliation, fraud detection, and compliance.
- Improved operational efficiency: With fewer manual processes, errors are reduced, and payment processing and resolution are accelerated.
- Enhanced transparency and real-time status updates: This boosts customer experience and liquidity management through immediate payment confirmations.
- Greater flexibility and future-proofing: The standard supports evolving business needs, new technologies, and integration with real-time payment systems globally.
- Better analytics and insights: Native ISO 20022 data improve decision-making and customer service, while translation-based approaches risk losing information and customer insights.
- Seamless interoperability: ISO 20022 enables smooth communication among global financial institutions and payment systems, easing cross-border payments complexities and supporting compliance with regional regulatory requirements.
The Limits of Translation-Based Approaches
On the other hand, translation-based approaches, which convert ISO 20022 messages back and forth into legacy formats (like SWIFT MT), often lead to data truncation or loss of rich data details, increased complexity, operational risk, and missed opportunities for innovation and efficiency gains.
The Role of Volante Technologies
Volante Technologies, a global leader in Payments as a Service (PaaS), advocates a proactive, strategic approach to ISO modernization. This approach enables financial institutions to fully modernize their infrastructure within six to nine months, unlocking long-term value, future-proofing their operations, and differentiating from competitors.
Volante Technologies has been at the forefront of ISO 20022 modernization for over a decade. Recently, the migration of the Fedwire Funds Service to the ISO 20022 messaging format marked a significant modernization milestone. As of the July 14 ISO 20022 migration deadline, Volante customers process more than $1.4 trillion daily, which is approximately 30% of total Fedwire values.
The migration of all banking customers to the ISO 20022 messaging format for the Fedwire Funds Service has been successful, paving the way for its seamless integration with SWIFT and other prominent real-time gross settlement systems. With the instant payment networks FedNow and RTP also ISO-native, the U.S. payments system is now broadly unified under one messaging standard, from wires to real-time payments.
In conclusion, fully modernizing payments infrastructure to the ISO 20022 standard offers a path towards faster, more transparent, data-rich, and cost-effective payments infrastructure. Institutions that opt for a translation-based approach may not be able to fully leverage the benefits of the new messaging standard. Therefore, it is crucial for financial institutions to consider a proactive, strategic approach to ISO modernization to stay competitive in the ever-evolving payments landscape.
[1] ISO 20022: The Next Era of Payments (Volante Technologies, 2021) [2] ISO 20022: A Game Changer for Cross-Border Payments (The Banker, 2020) [3] The Impact of ISO 20022 on Payments Modernization (Financial Times, 2021) [4] The Role of Data in Driving Payments Modernization (PaymentsSource, 2021) [5] The Future of Cross-Border Payments: ISO 20022 and Beyond (Aite-Novarica Group, 2021)
- In the finance industry, technology plays a crucial role in the modernization process, as seen in Volante Technologies' proactive strategy for ISO 20022 adoption, which promises to future-proof financial institutions, improve operational efficiency, and unlock long-term value.
- Translation-based approaches, while still used in some industries, are limiting as they risk data truncation, loss of rich details, increased complexity, operational risk, and the inability to fully leverage the benefits of the advanced ISO 20022 messaging standard.
