Global cross-border payments system Swift is introducing an improved solution for handling payment investigations, intended to drastically cut the time required to resolve delayed transactions. This solution relies on ISO 20022, which could be a pivotal example of its broader adoption.
Financial institutions incur over $1.6 billion annually from labor-intensive investigations into delayed payments. According to Swift, their new solution could save more than $600 million per year and decrease case resolution times by up to 80%.
The speed of cross-border transactions has increased in recent years; 90% of transactions processed via Swift reach the destination bank within an hour. However, when a payment instruction lacks crucial information, it may take five to ten working days for financial institutions to resolve such issues. The average total time needed to complete a single investigation remains steady at 200 hours over the past five years.
Implementing New Standards
Swift’s new solution standardizes the investigation process through ISO 20022 data, enhancing transparency and interoperability across networks. Messages compliant with ISO 20022 deliver richer structured information and are understood universally by all transaction parties.
Beyond transactions on the Swift network, this protocol can also be applied to any payments utilizing UETR (Unique End-to-End Transaction Reference). The UETR standard ensures visibility into a payment’s status at every stage of its journey.
A Case Study for ISO 20022
Starting in November, Swift will mandate the use of ISO 20022 for payments on its network.
ISO 20022
provides a unified, standardized messaging framework aimed at improving communication interoperability among financial institutions and their market infrastructures.
Though ISO 20022 is anticipated to boost error-free transactions, one challenge impeding its global adoption is that many financial institutions have yet to fully embrace these benefits.
“Many financial institutions may initially view ISO 20022 as irrelevant,” observed
James Wester
, Co-Head of Payments at Javelin Strategy & Research. “However, these institutions will eventually have to face the increased costs associated with non-adoption.”