By Charles Abuede
The Central Bank of Nigeria (CBN) has directed financial institutions in Nigeria to begin the process leading to their migration to the ISO20022 Standard (International Organization of Standardization 20022) by SWIFT. This directive is aimed at mitigating the level of ambiguous, unstructured strings of data and the burden of information experienced by bank in the discharge of services to customers and issues of compliance.
The CBN, in a circular signed by Sam Okojere, director of banking services department, said: “In the years ahead, ISO20022 will be the defacto standard for high-value payment system in reserve currencies, supporting 80% of global volume and 87% of the value of transactions worldwide. ISO20022 will create a common language and model for payments data, improve significantly the quality of data across the payment’s ecosystem, richer, structured to build client confidence while improving compliance and efficiency. Given the above and the Covid19 Pandemic, SWIFT has set new timelines of November 2022 for the various activities leading to ISO20022 migration as follows:
- In 2020, the building of awareness about the change through the various resources, SWIFT makes available and assessing the impacts in collaboration with vendors.
- Throughout the year 2020 and 2021, implement the defined solution for adopting the change, testing it internally and preparing for further testing on the “real” network.
- Throughout 2020 and 2022 testing on the network with and without selected Correspondents and preparing for go-live.
The apex bank, therefore, urged all the financial institutions in Nigeria to comply with the above timelines, while stipulating that November 2022 will be the deadline for the exercise.
ISO20022 by Swift’s benefits to banks and customers
The adoption of the new technology into the Nigerian financial system will go a long way to create standards in the financial markets, enhance efficiency in compliance by the financial institution, rich customer experiences, as well as keeping pace with the competition within the industry.
According to a report by Euromoney, Saqib Sheikh, the global head of the ISO 20022 programme at Swift, said “the adoption of this messaging standard will be a game-changer in two key ways. Firstly, it will allow them to challenge international payments to push from nascent Fintech companies. At the same time, it will help them to meet the increasingly tight compliance obligations on international payments.”
Sheikh further disclosed that its adoption will:
- Support the issues of payment to securities settlement with a focus on payments and cash reporting
- The platform will allow banks to offer to customers improved levels of services
- The revamping of the legacy systems for future-proof data standard will be in place
- Offer better and quality services to clients with speed and agility
- Bring structure to strings of data which may be matched with anti-money laundering screening lists
Meanwhile, “The ISO20022 for FI [financial institution] to FI payments and reporting will be live on SWIFT as at the end of November 2022. For the avoidance of doubt, after 3 years of coexistence, the Corresponding legacy SWIFT MT Messages will be decommissioned on the SWIFT platform by November 2025,” the circular further reads.