Nigerian banks may just be recovering from the impact of a devastating pandemic that took a toll on their financial books, but they are currently on a journey to migrate their SWIFT messages to ISO 20022 standard by November 2022. This migration is a significant transformation for the financial services industry and will enable global interoperability resulting in significant advancement in global payment processing.
According to SWIFT, “ISO 20022 is an increasingly established global language for payments messaging. Already used by payment systems in over 70 countries, in the coming years, it will be the de facto standard for high-value payment systems of all reserve currencies, supporting 80% of global volumes and 87% of the value of transactions worldwide. By creating a common language and model for payments data, ISO 20022 significantly improves the quality of data across the payment ecosystem. Richer, structured, meaningful data will enable new client experiences while improving compliance and efficiency.”
The timeline for the ISO 20022 standard was previously set for 2020. It was postponed to 2022 to provide more organizations time to comply with the migration owing to the interruption of Covid-19. Although the November deadline is universal, the Central Bank of Nigeria (CBN) has since October 2020 mandated all Nigerian banks to, on or before the deadline, migrate to the new standard. This means that banks have less than 14 months to complete the migration to ISO 20022 standard. A typical migration timeline can run anywhere from nine to twelve months, depending on the partner and solution.
For Nigerian banks, this timeline can run even longer and this is due to issues such as the high cost of upgrading the existing bank legacy systems, the insufficiency of the skill sets for handling the ISO 20022, the burden of upgrading, aligning, and guiding the bank’s customers through the transition, challenges with straight-through processing (STP), fraud and compliance difficulties throughout the payment cycle, the risk of payment process inefficiencies for non-compliance. Banks will have to deal with a raft of new problems, and the current migration only adds to the pressure.
But Sakobia, a product of Union Systems Limited and a central messaging hub can assist banks in meeting the ISO 20022 deadline without requiring them to change their legacy applications thereby saving time and money. With Sakobia, banks can complete their migration within three months.
How Sakobia works
ISO 20022 has the potential to improve present payment services and provide greater value to banks and the broader financial ecosystem, given its worldwide acceptance. Using Sakobia, banks can gain implementation savings, increased interoperability, compatibility, and reduced switching efforts (“lock-in scenario”).
Sakobia throws banks a lifeline. As a smart middleware, Sakobia enables the bank to automatically transform the current SWIFT messages to the new ISO20022 data-rich well-structured messages by connecting their legacy applications to it.
“As a SWIFT technology partner, we understand the complexities surrounding this migration and the need for banks to achieve compliance quickly and cost-effectively. We have the requisite expertise and product to ease this process for banks while saving them money” Emmanuel Nkenwokeneme, Chief Technology Officer, Union Systems notes.
Sakobia’s ability to convert messages from MT to MX automatically is a unique selling factor. It handles SWIFT message generation, validation, authorization, and translation without requiring any changes to the bank’s existing infrastructure. This is especially crucial for banks with tight budgets who are concerned about missing the deadline.
Sakobia reduces the cost of migrating to the new ISO20022 standard for banks. To upgrade, banks will need to depend on new releases planned by their various vendors to support the upgrade. This mean paying each vendor differently and most of the costs are paid in foreign currencies. With Sakobia’s seamless integration across all banking applications, while transforming MT to MX messages, banks can meet the ISO20022 timeline while paying in local Nigeria Naira.