StoneX Global Payments: Navigating Our Ever-Changing Payment Landscape

Posted on Oct 27, 2022 by David Unsdorfer, Senior Vice President, StoneX Technology Services (EMEA)

Since its creation in the 1970s, SWIFT has been the financial messaging network of choice for more than 11,000 institutions globally, and the de facto network for securely processing cross-border payments. However, despite worldwide adoption of SWIFT’s messaging services and the network’s ability to securely exchange billions of financial messages every year, SWIFT faces numerous challenges in the years ahead.

First among these challenges will be overseeing the smooth and successful transition from the existing FIN messaging standards to new ISO 20022, or XML, standards.

ISO 20022 was created to establish a common language for payments and cash management data across the globe. It has also been an influential factor in the successful rollout of European SEPA payments. The hope is that the global financial community will unify around this data-rich standard and enable all SWIFT members to mutually benefit from the greater levels of operational efficiency, enhanced customer experiences, and innovative digital services that it makes possible.

But migration to this new standard will take time and be complex. While SWIFT member banks have until 2025 to migrate, it will require careful coordination and forward planning. However, many banks, particularly in emerging economies, will be challenged by a lack of time, budget, or resources needed to successfully and effectively implement these changes on time.

While global regulators push for more standardization, SWIFT was recently included in a wider package for implementing economic sanctions – first against Iran, and more recently against Russia – leading to fears of possible fragmentation.

Should nations or sub-regions adopt alternative networks to reach these sanctioned markets, it could have the unintended consequence of de-standardizing the payments landscape. If this geopolitical threat of disintermediation away from centralized incumbents like SWIFT does occur, it would likely force banks and other financial providers to support multiple channels, technologies, standards, and networks, thus representing a significant technological and regulatory challenge.

Further, blockchain technology and the emergence of cryptocurrencies pose another disintermediation threat in the payments space and could force players to support yet another type of technology.

In conclusion, change really is the only constant, and even if ISO 20022 is a global success, banks will always need to adapt to changing times and maturing technologies. While global regulators are rightly promoting the implementation of common standards, fast-developing geopolitical risks could lead to an increasingly fragmented ecosystem instead. This highlights the need for banks and financial services providers to employ smart, open and maximally interoperable technologies – technologies capable of supporting multiple channels, standards, and networks – as a means of helping financial institutions insulate themselves from an ever-changing landscape.

About StoneX Global Payments

StoneX Global Payments provides guaranteed, secure, and transparent payments to 180+ countries in 140+ currencies. StoneX Technology Services is also a SWIFT Service Bureau and bespoke technology solution provider. In parallel to the services, StoneX acts as a global FX payment correspondent to the world’s largest banks. This niche team works with hundreds of commercial banks and is uniquely positioned to speak on the observed trends and issues we are seeing in the market and share insights.

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Interoperability, Cross-Border Payments, Standards, ISO 20222