Enhanced Solution for Managing Payment Investigations by Swift

The global cross-border payments system, Swift, has introduced an advanced solution aimed at significantly reducing the duration required to settle delayed payments. This new offering heavily depends on ISO 20022 and is expected to play a pivotal role in promoting broader use of this messaging protocol.

Financial institutions incur substantial costs—over $1.6 billion annually—due to time-consuming investigations related to delayed payments. Swift asserts that their innovative solution could potentially save more than $600 million per year and expedite case resolution times by up to 80%.

Cross-border payment efficiency has seen improvement over the years, with 90% of transactions processed via Swift reaching destination banks within an hour. However, when a critical piece of information is absent in the payment instruction, it can take five to ten working days for financial institutions to address these issues. On average, resolving one investigation takes approximately 200 hours from start to finish.

Utilizing New Standards

Swift’s new solution standardizes the investigative process through ISO 20022 data, enhancing transparency and interoperability across networks. ISO 20022-compliant messages provide a more detailed structured dataset that can be easily understood by all parties involved in the transaction.

This protocol extends beyond transactions on the Swift network; it is also applicable to any payments leveraging UETR (Unique End-to-End Transaction Reference). The UETR standard ensures visibility into a payment’s status and location throughout every stage of the transaction process.

A Use Case for ISO 20022

Starting from November, Swift will mandate the use of ISO 20022 protocol for all payments on its network. The adoption of ISO 20022 offers a single standardized messaging framework designed to enhance communication and interoperability among financial institutions, market infrastructures, and end users.

Despite the potential benefits in error-free transactions, the global rollout of ISO 20022 has faced challenges due to some financial institutions not fully recognizing its advantages. According to James Wester, Co-Head of Payments at Javelin Strategy & Research, “There will likely be many financial institutions that view ISO 20022 and wonder if it applies to them. However, this just means they or their partners will face higher costs in the future.”