Optimizing wire transfers with ISO 20022 compliance: A Q&A session

In Alacriti’s webinar, Wired for Tomorrow: Optimizing Wire with ISO 20022 Compliance, Alacriti’s Neeraj Gupta, SVP of Product Management, addressed key questions from participants regarding wire modernization and the upcoming ISO 20022 compliance deadline. Here’s a summary of the insightful Q&A session:

Does ISO 20022 apply only to banks using Fedwire, or does it include those using products like Jack Henry’s DirectLine?
Neeraj Gupta: ISO 20022 applies to all financial institutions, regardless of their route to Fedwire. Whether they use a direct route or rely on vendors like Jack Henry, the obligation to comply with ISO 20022 remains. The key difference lies in whether the financial institution or its vendor shoulders the responsibility for compliance.

Has there been an increase in fraud losses with the adoption of automation and instant payments?
Neeraj Gupta: While fraud concerns are valid with instant payments, particularly due to the speed of settlement, there hasn’t been a significant rise in fraud related to automation in wire processing. The key is maintaining a multi-layered approach to fraud prevention, integrating AI and behavioral biometrics to mitigate risks.

How can the automation of wire transfers with ISO 20022 lead to a 50% reduction in costs?
Neeraj Gupta: Automation drastically reduces the time and manual labor required for wire processing, particularly in handling exceptions. By integrating with various systems like online banking and document management, financial institutions can achieve cost savings of up to 50%, especially by automating exception management, which traditionally consumes the most resources.

What steps should financial institutions take to ensure they meet the ISO 20022 compliance deadline in 2025?
Neeraj Gupta: Financial institutions should start by assembling a cross-functional team to handle the transition. Conducting a thorough assessment of data flows, especially at the edges of their systems, is crucial. Institutions should work closely with internal developers and vendors to create a robust rollout and testing plan, along with contingency planning to handle potential delays.

Is global interoperability more dependent on common standards like ISO 20022 or a common set of rules and experiences?
Neeraj Gupta: While common standards like ISO 20022 are essential for seamless cross-border transactions, the user experience and operational rules also play a critical role in ensuring global interoperability. Both elements are necessary to eliminate the need for data translation and to create a smooth, unified payment experience.

For an in-depth look on wire modernization, watch the full webinar, Wired for Tomorrow: Optimizing Wire with ISO 20022 Compliance, featuring Alacriti.

Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with ACH, Wire, TCH’s RTP^® network, Visa Direct, and the FedNow^® Service, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.