Introduction of Advanced Payment Investigation Management System by Swift

Global cross-border payments system Swift has introduced an advanced solution for handling payment investigations, designed to drastically reduce the time required to resolve delayed payments. Leaning on ISO 20022, this new tool could serve as a crucial example of how the messaging protocol can be utilized.

According to financial institutions, delayed payments result in annual costs exceeding $1.6 billion because of extensive investigative efforts. Swift asserts that their new solution may slash these expenses by over $600 million annually and shorten case resolution times by up to 80%.

Cross-border payment speed has increased recently, with 90% of transactions on the Swift network reaching destination banks within an hour. Nevertheless, payments that lack critical information can take five to ten working days for financial institutions to address. Over the past five years, the average end-to-end duration needed to complete a single investigation remained steady at 200 hours.

Utilization of New ISO Standards

Swift’s new system standardizes payment investigations by incorporating ISO 20022 data, thereby boosting transparency and interoperability across networks. ISO 20022 compliant messages offer a wealth of structured information that can be easily understood by all parties involved in the transaction.

Beyond transactions on the Swift network, the protocol can also apply to any payments using UETR (Unique End-to-End Transaction Reference). The UETR standard grants visibility into a payment’s status and location at every phase of its journey.

ISO 20022: A Case for Wider Adoption

Starting in November, Swift mandates the use of ISO 20022 for all payments processed on their network. This standardization is expected to enhance communication interoperability among financial institutions, market infrastructures, and end users.

Despite its potential benefits, adoption of ISO 20022 faces challenges as many financial institutions are still hesitant to embrace the change. “It’s likely that there will be numerous financial institutions that view ISO 20022 and think, ‘This doesn’t apply to us,’” remarked James Wester, Co-Head of Payments at Javelin Strategy & Research.

However, Mr. Wester warns, “Down the line, these institutions or their partners will have to bear higher costs as a result.”