New customer offerings can be unlocked by the launch of a new payment standard

European banks are anxiously awaiting the arrival of ISO 20022, set to go live in Europe and the UK this year (March and June, respectively). As we draw closer to technical implementation and final readiness, 2023 isn’t just the finishing line. It’s where the starting blocks are positioned to kick off and begin unlocking the full potential of ISO 20022.

ISO 20022 is the de facto global payments messaging standard representing a significant shift in payment capabilities globally. ISO means more data, better quality data, and one common language for payments synchronisation across the globe. Today, each firm and geography employs its own version of payments messaging. But fast forward a few months, and ISO 20022 will be mandated for Clearing House Automated Payment System (CHAPS) and Cross Border payments in the UK and Europe.

The adoption of a single standard brings benefits throughout the payments ecosystem; for banks, their customers, and their customers’ customers. Many banking leaders tend to agree that ISO 20022 will enable them to go beyond traditional banking. This includes enabling improved customer insights, creating opportunities to optimise processes, and generating new products and services.

So why aren’t organisations jumping all over this?

The answer is twofold. Firstly, ISO programmes are geared towards technical readiness, with experienced programme teams prioritising and focusing on ensuring that all system changes are ready in time for go-live. Secondly, those who are ingrained in the proposition development lifecycle, and their customers, don’t know enough about the upcoming standard and therefore struggle to see the value in adoption.

To unlock the power of ISO, firms must scratch way beneath the surface of system changes. Now is the time to begin extracting the full potential that ISO can bring in three easy steps.

1. Identify customer pain-points in how payment processes and services function today

Before organisations begin to explore potential growth opportunities, an assessment of current customer pain-points throughout key payment processes is required. ‘Pain mapping’ can be conducted by interviewing those in payment, digital, and customer-facing teams. By mapping out today’s processes, which are clunky and circling the areas in need of attention, organisations will be able to identify potential process improvements and new future experiences that could be developed. For example, personalisation is more important than ever in a competitive digital banking world. Organisations could look to leverage payment standards such as ISO to help deepen their relationship with customers, but this is only achievable by understanding what data firms currently have access to.

From a survey we conducted, both payers and payment receivers identified a lack of visibility over the status, timing, and fees behind processing payment transactions as a key area for improvement, especially in high-value cross-border transactions. This, coupled with an unrecognised manual effort to identify and resolve data errors, leads to a lack of confidence from both sides of the transaction.

2. Think beyond payments and consider the wider supply chain when designing products

Once high-level ideas have been identified, organisations can start to consider innovative ways to use the capabilities of the ISO standard to deliver real customer value and commercial benefit beyond technical compliance and payments.

Such ideas do not necessarily have to be constrained to operational process improvement. Organisations should consider their current customers’ expectations, how they benchmark against their competitors and what future expectations may look like. These could include customer dashboarding on behavioural spending trends, budgeting controls, and even utilising relevant location data for the cross-selling of complementary goods and services.

To exceed their customers’ future needs, organisations will need to get creative and draw on the expertise of product designers and research experts to help them gauge a futuristic view and a market-leading advantage. Such routes to market could be identified through improving existing experiences, introducing new services in-house or partnering with third-party providers that leverage different capabilities.

3. Validate proposition candidates with customers of different segments

Upon fleshing out a series of candidates, the next step requires organisations to validate assumptions about each idea. This is an opportunity to question the true desirability, viability, and feasibility of the proposed solutions.

It’s important when testing out ideas to do so extensively with customers from different segments and jurisdictions. While patterns and trends may have been identified, only through exploring the credibility of these options will organisations know whether they are onto something that can help them better deliver aligned to their corporate strategy.

ISO 20022 is a sleeping giant that could lead to the biggest change to payments in a generation, but firms must start thinking beyond compliance.

Poor quality data limits a bank’s ability to develop relevant, valuable, and personalised new services for customers. We’ve all read how ISO enables richer character sets, remittance data, and introduces purpose codes but the opportunities are far greater than just payments processing. Now is a golden time for organisations across the payments ecosystem to explore how they can better use the additional data they’ll soon have access to.

While many programme managers begin to wind down their transformation programmes, they should be mindful of the baton they must pass to their colleagues. The first hurdle of ISO will soon draw to a close, but the journey is only just beginning. ISO 20022 is an opportunity that still needs to be fully realised. It’s an opportunity where un-met and un-articulated customer needs can be discovered to deliver real customer value and commercial benefit.