What is ISO 20022?
In finance ISO 20022 is a standard that facilitates the interpretation and understanding of fintech data such as card payments and foreign exchange trading. By the end of 2025, ISO 20022 is expected to be the global standard for payments.
Essentially, ISO 20022 is a method for classifying financial data content. The standard provides a common language for people and machines to exchange financial information and is a terminological framework. The standard itself focuses more on the content of this vocabulary than on the technical features of data exchange.
Messaging standards offer clear definitions of both the format and information contained in the messages exchanged between two parties. ISO 20022 defines many factors, including character sets, codes and field lengths. It is this uniformity that negates the need for human intervention. To eliminate the need for human intervention in interpreting data, the financial industry has created message definitions, that is, agreements have been reached on the meaning (semantics) and formats (syntax) of the data exchanged.
ISO 20022 represents just one of many standards used in the financial industry, with many different standards covering different business areas and geographic regions.
There are two major obstacles to a common understanding of data shared by two different computer systems: the use of syntax (structure) and the use of semantics (meaning). When trying to implement end-to-end integration, using different names often complicates things. Expert help is needed here on how to interpret and reconcile the information being sent. It is necessary to be familiar with specific terminology, syntax and semantics, which requires a significant investment in technology and time.
ISO 20022 overcomes these barriers by offering the methodology needed to achieve consistent message standards: the top level provides key business concepts and processes, the middle level provides message models or logical messages. Finally, the bottom level has to do with syntax.
Whatever your organization's situation, the fact remains that ISO 20022 should be the official standard for payments by the end of 2025.
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