The South African Reserve Bank (SARB) recently became a pioneer in adopting the new ISO 20022 messaging standard for all real-time gross settlements (RTGS).
For years we have been saying that African banks have the capability to leapfrog their international counterparts through technology, and here the SARB has proved us right.
The SARB owns and operates the South African Multiple Option Settlement (SAMOS) system, which facilitates the settlement of domestic individual high-value payment transactions, retail transaction batches, and bond and equity market settlement obligations. SAMOS went live with the adoption of ISO 20022 over the weekend of 17-19 September 2022.
The adoption of the ISO 20022 standard is expected to improve compliance and transparency, increase efficiency and interoperability, enhance customer experience, and speed up payment systems harmonisation.
As a country we stand on the brink of a possible grey-listing, and this move to ISO 20022 is mayor step to ensure that we have richer payments data to detect fraud quicker.
The benefits of ISO 20022
The adoption of ISO 20022 by the SARB will also drive the change through to the South African Development Community (SADC) for SADC-RTGS, which is expected in October 2023.
It also paves the way for faster payments through the introduction of the Rapid Payments Program (RPP) in 2023, launched under the brand PayShap.
The RPP will offer cost-effective payments across banks, a proxy service to embed user banking details, a request to pay service as well as several retail payments use cases, which should create new opportunities for FinTechs and alignment to Open Banking practices.
Andile’s role in ISO 20022 adoption
Andile managed and implemented the adoption of the ISO 20022 format for all SAMOS settlements for two of our banking clients in the South African market. It means they now have the building blocks in place to meet the 20 March 2023 deadline for cross-border payments and reporting (CBPR+).
SAMOS was the first step in migrating to ISO 20022, as the ISO 20022 for cross-border payments and reporting (CBPR+) will go live for all impacted banks on 20 March 2023, with the coexistence of ISO 20022 MX and legacy MT until November 2025.
ISO 20022 will impact all financial institutions active in cross-border payments as well as market infrastructures and corporates. Organisations will have to consider and implement solutions to process and store richer and structured ISO messages. From March 2023, organisations will be expected to start processing ISO 20022 (MX) and/or multi-format messages (MX with embedded translated MT). This will impact the entire payment chain, from the core banking application, middleware, reconciliation, liquidity management, compliance controls and archival systems.
We believe being prepared well ahead of the deadline will put the industry in good stead and help in the prevention of our grey listing, as we can detect and combat fraud quicker, with the same professionalism that our peers do.
Download the SARB announcement on South Africa’s ISO20022 adoption here: https://www.resbank.co.za/content/dam/sarb/publications/media-releases/2022/iso-20022/ISO%2020022%20Post%20go-live%20press%20release.pdf