Vietnamese Banks Accelerate Migration to ISO20022
ISO20022 Migration to Transform Vietnam's Financial Sector
November 30, 2023
The banking industry worldwide is undergoing a significant transformation with the adoption of the ISO20022 standard. This global language for financial communication is bringing about a shift from MT (Message Type) based systems to MX (ISO20022 Message) based operations).
ABeam Consulting, a leading consulting firm, is at the forefront of this transition, driving the change for major banks across Asia, including Vietnam.
What is ISO20022 ?
ISO20022 is a global standard for electronic data interchange between financial institutions. It provides a framework for creating financial messaging standards, enhancing the quality of information exchanged between financial institutions, and enabling greater interoperability. The ISO20022 standard uses an XML-based syntax, referred to as MX, replacing the older MT syntax used in SWIFT messaging.
The Need for the Transition to MX
The transition from MT to MX is driven mainly by 3 factors.
- Advancement of Business Management and Operations
ISO 20022 allows the transmission of large amounts of data, enabling more detailed information to be sent with transactions. This includes not just financial information but also accompanying data like invoices, which is beneficial for reconciliation and reporting purposes. The standard supports the automation of financial processes. With structured, rich data, it's easier to automate transactions and reduce manual intervention, leading to faster processing times and fewer errors. - Compliance to new SWIFT format for Cross Border Payment
SWIFT, the global provider of secure financial messaging services, has announced that it will discontinue the use of the MT format for certain categories of messages by the end of November 2025. This effectively means that banks that fail to comply with the MX format will not be able to execute cross-border remittances. - Transition in Domestic Remittance in Asian Countries
In addition to above 2 points, the transition in Domestic Remittance in Asian Countries is also accelerated these days. The adoption of the MX format is not limited, but all countries, especially in Asian markets such as Thailand, Indonesia, Singapore, Hong Kong, Malaysia, etc., are also transitioning to the MX format for domestic remittances. This trend suggests that the SBV may soon require Vietnamese banks to adopt the MX format for domestic remittances as well.
Necessary Actions for the Transition
Although the main player of the transition is bank, it also requires cooperation of enterprises and other financial institutions. Firstly, banks need to enhance their business operations to handle new format and information which will be enabled by MX. Correspondingly, related systems which handles payments should be enhanced as well. This series of enhancement are required to not only the bank, but also the bank's customers as the payment format which bank’s customer (and beneficiaries further beyond the bank) need to handle.
The ISO 20022 migration is the project not only has an impact on bank, but also on the business operation at the client end. Adequate preparation is essential to ensure that the clients and the bank are ready by the date of transition to ISO 20022.
What ABeam can Support
The transition to MX is a complex and challenging process, but it also presents significant opportunities. It would be a great opportunity for banks and bank’s customers to make drastic business enhancement and business operation optimization. ABeam Consulting, has rich knowledge of ISO20022 changes and also actual project experiences in several Asian countries. ABeam is not only a specialist of ISO20022 but also a specialist of entire banking operation, therefore, by taking this opportunity, ABeam could also support entire business process re-engineering(BPR), digital transformation(DX), AML enhancement and so on.
One of the uniqueness of ABeam is to accompany clients to realize the solution that ABeam proposed until it is realized. This is the embodiment of ABeam's company slogan "Real Partner”.
Why don't you and Company A take advantage of this opportunity to review your operations fundamentally ?
ABeam Consulting's track record of ISO20022 related projects as 2023
