ISO 20022: Helping banks with transformation through faster onboarding and more accurate testing

ISO 20022 is the agreed methodology used by the financial industry to create consistent message standards across all the business processes of the industry.

In Europe, most banks have adopted ISO 20022 as part of their support for SEPA payments. In other parts of the world, there are several transformations on-going, for example in:

The modular design of ISO20022 brought along new challenges. This is mainly due to the fact that banks have a varied set of IT systems for processing payments, and as a result there are differences in the way that banks handle ISO 20022 messages internally. There are also national and regional variants of ISO 20022,  as well as CGI-MP, a global ISO 20022 market practice for corporate to bank payments.

While the ISO standard and CGI-MP lay out a baseline, country- and bank-specific rules add complexity. Specific rules on how data in the payment messages is applied inside a bank payments flow vary. Managing numerous variants in a production environment is often a non-trivial task.

Tip: Download our Infographic ISO 20022 in Payments Domain

Challenges in ISO 20022 Transformations

One challenge in ISO 20022 transformations is to onboard (or migrate) corporate customers to use the ISO 20022 format. Onboarding here refers to the technical preparation work that enables the corporates to send and receive payment messages using ISO 20022. Due to the variations in ISO 20022 usage outlined earlier, each bank needs to ensure that corporate customers understand the specific sets of rules around ISO 20022 usage at their bank.

ISO 20022 sending and receiving payment messages

A key part of the ISO20022 transformation is to define the payment messages that the bank will use precisely. Typically, banks publish Message Implementation Guides where these messages and their processing rules are defined.

Banks furthermore need to automate the testing of their payments systems using realistic payments files that reflect their specific ISO 20022 usage. This is a time-consuming task.

Technical Onboarding for Corporates

The importance of onboarding corporates to ISO 20022 is that once they use ISO 20022, it will be easier to process payments internally, especially international payments. However, the business case for investing into onboarding tools is based on significantly reduced support workload at the bank during the ISO 20022 transformation.

We at XMLdation make this possible through a full customer self-service testing platform operated as Software-As-A-Service. The platform provides to banks, and their corporate customers, an instantly available and easy-to-use message documentation, example file, validation and simulation toolkit that can be used as soon as the corporate team starts their technical work. This makes it possible for the bank customer support team to take control of customer onboarding, rather than simply assist customers in solving problems emerging late in the process..

At its simplest, this approach will shorten the time needed for the onboarding of a single corporate, and therefore increase customer satisfaction. Typically the quality of a traditional support service will be dependent on the payment message competence of each support specialist. With XMLdation, banks can consistently provide the highest level of service to all its customers as the service is not dependent on support specialist personal competence.

XMLdation is committed not only to develop product features that help to increase customer satisfaction, but also ready to consult on-site, by training bank staff and solving problems on the go.

Watch webinar recording: ISO 20022 by a Thousand Cuts

Message Implementation Guides

As mentioned before, banks call the content and documentation which defines the messages and the applied business rules “Message Implementation Guides”. These kinds of documents are a great example of payments ecosystem content that we support.

In order to minimize the effort and challenges of sharing the banks Message Implementation Guide for its ISO 20022 variant, we provide a tool for creating and maintaining rules, combined with ready-to-use definition libraries for ISO 20022, CGI-MP as well as for many regional or national variants of the standard. These can serve as templates for the development of custom rule sets and are easy to be cloned, modified and shared to XMLdation’s Validator or even to other 3rd party documentation systems.

Payment System Testing

Payment Systems that process payment messages are complex. In order to achieve any meaningful test coverage for these systems during the transformation to ISO 20022, the amount of test cases is massive. To execute the test cases, source data is required. But not just any source data: The requirement for test data in payments is that it must:

  • Reflect the actual rules how payment messages are processed.
  • Include realistic data such as timestamps, IBAN numbers, names etc.

In the core of our support for bank to bank testing stands our Test Data solution:

  • It is able to create large amounts of realistic, bank-specific test data.
  • It can be called through a REST API, to allow for the integration to a test automation framework.

This helps the bank test team to achieve broad test coverage, a major challenge if creating test data manually..

In internal system testing, it is also possible to use our Validator Service to ensure manually created test files are correct, calling into the Validator Service via its REST API. This allows for the integration to various test automation products.

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About XMLdation

XMLdation is a world leader in testing for payments messaging and APIs, covering ISO 20022, SWIFT MT along with national and proprietary payments formats.

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