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2023 11 30 Mario Reichel of PPI: Leveraging ISO 20022

2023 11 30 Mario Reichel of PPI: Leveraging ISO 20022

Nov 30, 2023

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Details

Date: Thursday, November 30, 2023

***NOTE SPECIAL TIME: 8:30pm IST / 4:00pm CET / 10:00am EST / 7:00am PST***

Meeting link: https://zoom.us/my/hyperledger.community.backup?pwd=dkJKdHRlc3dNZEdKR1JYdW40R2pDUT09

Zoom Meeting ID: 622 333 6701          Passcode: 475869

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Presentation

Mario Reichel of PPI: Leveraging ISO 20022 to Optimize Supply Chain and Trade Finance Management Platforms: Harmonized ISO 20022 for Cross-Border Payments – A Data Model Also for Blockchain Solutions in Logistics

PRESENTATION

Mario Reichel, along with Ayhan Koseoglu of PPI: Presented their knowledge of leveraging ISO 20020 to optimize supply chain and trade finance management platforms.

  • PPI is a company providing software end-to-end solutions and consulting for the understanding and migration to ISP 20020 for financial transactions.

  • Mario described the ISO 20022 international standard for data transport between financial service companies. This message standard is a common platform for the development of messages for the following:

    • Is a modelling methodology to capture in a syntax-independent way financial business areas, business transactions and associated message flows

    • Is a central dictionary of business items used in financial communications

    • A set of XML and ASN.1 design rules to convert the message models into XML or ASN.1 schema

  • The focus of ISO 20022 is to produce a single standardized approach(methodology) for the development of standards to be utilized during financial standards initiatives. It is a recipe defining specific rules on how to develop messages:

    • ISO 20022 does not define the message standard itself. It specifies rules and a methodology for how messages are to be developed.

    • Supported by the global SWIFT community

    • SWIFT does not mandate migration. The decision to migrate is a decision to be reached by various stakeholder financial communities

  • The ISO 20022 standard consists of a set of definitions and roles:

    • It is a concept for the development of standards

      • A single standardization approach(methodology, strict procedure) to be used for all financial standards initiatives

      • A central financial repository

    • Freely and openly available

      • More than 740 messages are available free of charge on ISO20022.org

      • Not just for payments

      • 20+ organizations are involved along side SWIFT

    • Supported by SWIFT

      • SWIFT assumes the role of registration authority (RA)

      • Is a service provider for the community

      • SWIFT is not mandating a migration

      • Communities decide if and when they want to migrate – also applies to new releases

    • Not just XML tag standardization

      • ISO 20022 is independent of network and syntax

      • ASN.1 is an additional syntax

    • Also a basis for API development

      • In order to support non-file based communication consistently to the ISO 20022 data model

      • Representation via JSON next to XML

  • Customer Credit Transfer Initiation V9 (pain.001.001.09)

    • Is an XML based message format under the ISO 20022 standard

    • Designed to streamline cross-border and domestic payment processes

    • The successor to V9 message format and include a number of enhancements

    • pain.001.001.09 = Business Doman + purpose + variant + version

    • Covers the following business domains

      • payments initiation

      • payments clearing and settlement

      • account management

      • cash management

      • securities trade

      • collateral

      • Trade Services Initiation

    • Enhanced data richness

    • Improved flexibility – more flexible payment instructions

    • Increased security

    • Improved interoperability

    • A description of the “4 corners model” for payment systems was provided

    • Bank agnostic to initial payments

    • Adoption level is across the globe with:

      • 70 countries

      • 80% of the volume in near future

  • Global Harmonization – CPMI (Committee on Payments and Market Infrastructures)

    • Focuses on harmonization of data requirements for the use of ISO 20022 messages for cross border payments.

    • The CPMI developed the data requirements for ISO 20022 in collaboration with the private sector.

    • Presentation demonstrated(slides) the end to end of richer and better structured information

    • Provides for richer data elements:

      • category purpose code

      • purpose code

      • end-to-end reference

      • ultimate debtor and/or ultimate creditor

      • structured remittance info

      • dedicated tags for LEI and UETR

    • Under the CPMI data requirements are a core set of messages and 12 basic requirements:

      • appropriate message for a particular business function

      • ISO 20022 externalized codes for payments and payment related processes

      • character set used for ISO 20022

      • common time convention across messages

      • unique end-to-end reference

      • transparency on amounts, FX and charges

      • unique account identifiers to the extent possible

      • identify all Fis involved in a standardized way(BIC or LEI

      • identify all entries and person involved in a structured way

      • common minimum level of postal address – structured

      • transport of customer remittance information across the entire chain by enabling structured or unstructured remittance information

    • PDF report to the G20 entitled “Harmonized ISO 20022 data requirements for enhancing cross-border payments available online

    • PDF available “Consideration for the use of Stablecoin Arrangements in Cross-Border Payments” through online search.

  • A working Example of ISO 20022:

    • EVONIK and THEMIS, two European chemical companies, have an automated bidirectional invoice settlement and payment process. Components of the solution(architecture) are:

      • CORDA for security integration to their respective ERP systems through a standard information flow

      • Smart contract for payment after automatic validation of the order plus confirmation matching.

      • Nodes and wallets – payment absent any intermediary, cash on ledger

      • E-money by licensed PSP in Fiat money

Attendees

@Tom Klein 

Mario Reichel

@Jeff Pribich 

@Alicia Noel 

@Andrea Frosinini 

@Ayhan Köseoğlu 

Michael Vander (Coface)

Fatih Ozgul

Michael Darden, DFM Data

Murali Balann

Fahmy Laute

@Ling W Chang 

Ricardo Orsi

Faris Jebara

@Ned Thompson, MBA 

Kirsi Larkiala

Kay Nijenhuis

Ledia

Whit Knapp