What is ISO20022? How Will it Benefit Crypto?
Over the last couple of years, the difficult economic conditions have increased the need for liquid cash and liquid cash management. Consequently, this has spiked the use of electronic payment systems, and that’s where ISO2022 comes into play.
As things take a more exciting turn, 1S020022 will unlock massive opportunities for financial institutions. Banks and financial institutions globally will launch into a new economic era in 2022. This has been a 15-year-long journey, but many preparations are still ongoing as we wait for the transition from SWIFT to the fresh and highly structured ISO20022.
The goal is to make sure that by 2025, ISO20022 becomes the universal messaging standard for large and high-value payment systems. That said, this article will discuss what ISO20022 is and how it will benefit crypto.
What is ISO20022?
ISO20022 is an international messaging standard for relaying electronic messages between financial institutions. Essentially, it’s an open standard that creates a common language for payment networks globally.
ISO20022 is strategically planned to boost operational efficiency, enable new and innovative services, and generally foster customer experience. ISO20022 supports at least 80% of the transaction volumes and 87% of the transaction value globally. According to the official website, ISO20022 will go live from November.
With just a few months on the clock, the planned migrations to the new financial system haven’t been a walk in the park. There have been many challenges, and as we get to the implementation stage, it will be another pretty stressful time for all who will be involved.
What are the Benefits of ISO20022?
As discussed in the section above, ISO20022 is set to create a standard payment data and messaging model. It promotes higher quality data transfer, which means faster payments and better quality for everyone in the financial industry.
The best part is that ISO20022 is an open standard that quickly adapts to changes and new approaches. That said, let’s explore some of the significant benefits of ISO20022.
Enriched Data
With enriched data at their fingertips, financial institutions will be able to provide faster and better service to their consumers while also generating new, personalized solutions based on customer behaviour analysis. Greater competition in the financial sector means more flexibility and better data, leading to product innovation.
Better Analytics
ISO20022 also comes with improved analytics and therefore requires little manual intervention. Thus, the payment systems can run smoothly with minimal human interactions. That generally improves the accuracy level of the entire process.
Better Integration of Modern Technologies
The new ISO20022 network utilizes XLM technologies. Therefore, it can be seamlessly integrated and supported with the current systems. That will pave the way for more efficient integration, security and more reliable fraud protection measures.
Standardization of non-Latin alphabets
As the new standard, ISO20022 will also allow some longer references for the non-Latin alphabets. The character set will be 10x longer than the SWIFT MT messages. Therefore, the new standard will allow a greater deal of information.
Global adoption of the technology
Almost 200 market infrastructure initiatives have already implemented ISO20022 or are exploring it as a suitable standard for payments and securities transformation projects.
What Does the New ISO20022 Technology Mean for the Crypto Industry?
Cryptocurrencies are inherently decentralized. What does that mean? Investors can exchange assets in an unregulated manner outside of government control. While this seems like such a great thing for people who want to maintain their privacy, that makes it impossible to regulate the systems.
So, why does ISO20022 matter to crypto investors? Well, we can all agree that cryptocurrencies are inherently decentralized. Investors can exchange assets in an unregulated manner outside of government control. While this may be incredible for people who value their privacy, it makes the systems impossible to regulate.
As a result, there’s been a heated debate about the whole idea of global banks and financial institutions using ISO20022 in a centralized manner. This may seem odd, as many of the earliest cryptos were created with the idea of avoiding centralization.
But as things move ahead, we can see more cryptos become ISO20022 compliant. This is excellent preparation for the future if the FSR decides to authorize digital reserve currencies; these complain cryptos will be some of the main options explored.
Which are the ISO20022 Compliant Cryptos?
According to crypto market analysts, the switch to the ISO20022 global standard poses a threat to a good number of cryptocurrencies. ISO20022 will likely impede the adoption of some cryptocurrencies, such as Bitcoin, as widely used international money transfer vehicles.
But the good thing is that we have a few cryptos which meet ISO20022 compliance standards. Therefore, these cryptos could be great investment opportunities as we ushered into a new financial era. That includes;
XRP&XLM: These two cryptos are not only ISO20022 compliant but also are members of the ISO20022 body. XRP was the first to join the body, opening up standardization for distributed ledger technology.
Other compliant cryptos include;
FLR
ALGO
XDC
IOTA
That said, crypto investors who are bullish on the launch of the new financial era with ISO20022 should take a look at these cryptocurrencies. All in all, the outcome of the ISO20022 integration remains unseen; therefore, it has recently become a hot topic in the crypto world.
ISO20022; Summary
ISO 20022 has aided in bridging the gap between preceding standards. However, we won’t be seeing a lot of individual standards in the future. The current standard- ISO20022, involves new technical requirements for formats and guidelines on how financial transactions should be carried out.
The foundation that ISO20022 establishes applies to all market players globally. As a result, it simplifies a lot of things during processing. However, its most significant feature is its globally machine-readable format, which different institutions may customize.
