Contributed by Chesapeake’s John Snyder, Vice President of Business Development

How ISO 20022 Relates to Chesapeake

Chesapeake is in the financial software business and is rapidly developing a diverse, international, enterprise-level customer base. Thus, ISO 20022 will affect our products in the years ahead. Over the short term, two ISO 20022 application areas already carry implications for our SmartAnalysis:

1. The X12 822 standard is only used in the United States. To address the need for an international account analysis reporting standard, International Bank Compensation (IBC) partnered with the Transaction Workflow Innovation Standards Team (TWIST) to create the Bank Services Billing (BSB) standard. TWIST BSB, which was published several years ago, is being adopted by banks around the world. Notably, its design incorporated compatibility with ISO 20022 guidelines, and it has been submitted for incorporation into ISO 20022. Chesapeake enhanced SmartAnalysis to process TWIST BSB files as an alternative to X12 822 files. The TWIST BSB standard does not include bank service code specifications. It includes a data field designated for a service code but offers no instructions on what values to enter. TWIST was willing to let banks create their own codes. However, this missing element created a serious barrier to bank adoption of TWIST BSB. On the other hand, X12 822 clearly identifies the AFP service codes as part of the standard. Unfortunately, the AFP codes are not suitable for international use because AFP does not define a number of common bank service fees used outside the United States. Seeing this problem, AFP offered to revise its current code set to add the missing international codes. AFP recently published a proposed revised code set for review, called Global Service Codes, and Chesapeake participated in that review. SmartAnalysis user-defined code functionality guarantees that no product enhancements will be necessary to fully support the new AFP codes when implemented.
2. One of the most burdensome, non-automated tasks associated with corporate banking is account management – opening, closing, updating, changing signature authority, etc. Most activity occurs via non-standardized forms and phone calls. SWIFT took the initiative to solve this problem by creating an ISO 20022 message set for Electronic Bank Account Management (eBAM), which some banks and their large corporate customers are already using. Notably, SmartAnalysis already has a Relationship Manager module to maintain all of the demographics and parameters associated with bank accounts. Chesapeake is currently designing the best way to incorporate eBAM into this processing.

On another front, in 2009, the mantle of bank data reporting standards keeper was passed from BAI to ISO 20022. Over the years, banks will start sending ISO 20022 CAMT (cash management) message files instead of BAI files. That change will affect Chesapeake’s T-Recs Enterprise and Internet Data Manager (IDM). Both products are very BAI “aware” and will need to be able to understand the new messages just as well.

Two benefits accompany this change:

1. ISO 20022 will impose much more consistency in balance and transaction typing.
2. The same message set will include a replacement for SWIFT MT 940 statements (T-Recs Enterprise also is MT 940 “aware”) making it a single universal standard.

One other aspect of ISO 20022 will affect T-Recs Enterprise: the payments message set. As these messages become widely used for payments and transfers, Chesapeake will need to build them into import and export processing.

So, there is a lot of activity going on relative to ISO 20022. It will affect not only Chesapeake software but also most of our customers eventually. Fortunately, the changes are generally beneficial, adding and standardizing data while streamlining and automating processing. Those are all good things.

We want to get your feedback. Where do you see ISO 20022 becoming a requirement from your perspective? Are you processing ISO 20022 messages already? If so, what messages and for what applications? Do you see view ISO 20011 as a hassle or a business opportunity? Please comment!

If you have any questions, you can contact Chesapeake Systems Solutions by calling 410.356.6805 or visitChessys.com today!

Chesapeake provides industry-leading, end-to-end financial solutions that seamlessly integrate cash management/treasury with general ledger account reconciliation, account analysis, and regulatory compliance functions. Information-sharing across all applications optimizes funds management, improves the financial close process, increases the efficiency and accuracy of general ledger account reconciliation, and simplifies compliance by enforcing company policies and procedures and financial regulations. Chesapeake solutions deliver actionable information and productivity improvements that can benefit a wide range of organizations, yielding tangible ROI from your software investment. From retailers to banks and financial services organizations to insurance companies, Chesapeake solutions help minimize risk, reduce costs, and maximize profitability.

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