2015 nacha presentation - ach network roadmap for iso 20022

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ACH Network Roadmap for ISO 20022

Robert Unger, Senior Director, NACHA

Nasreen Quibria, Managing Director, Q insights

Tom Durkin, Managing Director, Bank of America











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Today’s Discussion











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ISO 20022 Overview

What is ISO?• The International Standards Organization

• The U.S. is a member and contributor through the Accredited Standards

Committee (ASC) X9

What is ISO 20022?• A harmonized set of XML messaging standards across major financial services

domains – Payments, Securities, Trade, Card and FX

• Based on a shared data dictionary and business process model

• Freely available to all members of the financial services community

• Foundation of SWIFT’s future standards development (SWIFT MX)











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What is ISO 20022 for Payments?

SWIFT’s ISO 20022 adoption mApp for iPad - download from the App Store

on https://itunes.apple.com/app/iso-20022-adoption-88197590?ls=1&mt=8

Live ISO 20022 standards or on the future roadmap…

› Robust standard with room

for additional payment-

related information –

addresses end-to-end

communications – from the

remitter through beneficiary

› Standard being adopted by

an increasing number of the

world’s payments, clearing &

settlement systems

› Growing interest from

financial institutions,

corporations and financial

applications providers

› SWIFT Standards and the

Payments Market Practice

Group have developed

global implementation

guidelines for high-value

payments with a cross-border

leg

https://itunes.apple.com/app/iso-20022-adoption-mapp/id688197590?ls=1&mt=8











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Who are the players?











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“One Foot in the Present and the Other in the Future”

› Meeting the current needs

of early adopter and

innovative end-users

› Leading the U.S. payments

industry in the future

adoption of ISO 20022

NACHA’s implementation and support strategy for the ISO 20022 Payment Messaging Standard and the ACH Network includes two focal points:











7

NACHA’s Leadership Activities on ISO 20022

2011- 2012 2013 - 2014

• “Recommendation to Support XML Formats on the ACH Network for Payment Remittances”

• International corporate remittance process benchmark

State of the Industry –

Opportunity

Assessment

ISO 20022 for

ACH Payment Remittance

• NACHA participation in the development of remt.001/002

• NACHA launch of XML-ACH Opt-in Program for use of remt.001/002

› In 2013, NACHA launched an XML-ACH Opt-in

Program that allows participants to exchanged

XML formatted payments information for CTX

transactions

‾ Participating FI’s must sign up to send and

receive

‾ NACHA developed XML schema, data

dictionary, and rules

‾ Formatting was harmonized with FED’s ERI

specification

› In 2014, NACHA completed its work with industry

partner IFX-Interactive Financial Exchange for

the ISO submission and approval of two ISO

20022 messages for payments information

(remt.001) (remt.002)

‾ ISO 20022 remt messages maybe sent with

payment instructions or stand-alone

‾ https://www.nacha.org/programs/xml-

ach-remittance-xml-ach

› In 2014, NACHA completed work to adopt ISO

20022 remit messaging for its XML Remittance

Opt-in Program

https://mail.nacha.org/owa/redir.aspx?C=Jhuke_ejIU2vVkYfU6ktisfO52IsG9IIhPAFO2GCGjquE97kYq03wj9BIlCzTnTgwbfCEDmI-iQ.&URL=https://www.nacha.org/programs/xml-ach-remittance-xml-ach











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2011- 2012 2013 - 2014 2014 - 2015




Opportunity

Assessment

ISO 20022 for


ISO 20022 for

ACH Payment Origination



• NACHA ISO 20022-to-ACH Mapping Tool for Payment Origination (pain.001)

• Training and Education on ISO 20022 for ACH

• CGI-MP collaboration• US “Stakeholder

Group” [The Fed, The Clearing House, NACHA, X9] collaboration











9

ISO 20022 Business Case Assessment Strategic Reasons to Consider ISO 20022 Adoption in the U.S. Market

Strategic Reason Description

Global Momentum Large U.S. corporates and banks are actively adopting ISO 20022 and that is

expected to continue.

Global Competition Compatibility with the ISO 20022 format enables the United States to maintain

parity with other global markets and U.S. dollar clearing systems in other

jurisdictions that are adopting ISO 20022 messaging, which may help preserve the

attractiveness of the U.S. dollar as a global currency.

Cost Savings &

Processing Efficiency

Standardizing message formats allows for consolidation of payments platforms at

banks and corporations, which could promote straight-through processing and

drive down costs.

Consistent & Rich Data The ISO 20022 format enables all parties to leverage a common set of data

dictionary elements and expands capacity to carry rich data in the payment

message.

Interoperability A common format promotes ease of transacting domestically and globally by

using a single, open standard rather than multiple proprietary standards.

Agility to meet evolving

regulatory needs

The ISO 20022 format provides for full originator and receiver information (third

party or ultimate beneficiary) allowing for improved regulatory reporting and

monitoring.

New, innovative

products

A common format across systems reduces the amount of change required to

bring innovative new products and services to market.











10


2011- 2012 2013 - 2014 2014 - 2015




Opportunity

Assessment

ISO 20022 for


ISO 20022 for








7

› 1st QTR 2015 NACHA

releases the ISO 20022

Mapping Guide to

standardize ODFI

conversion of ISO 20022

(pain) messaging to ACH

formats:

– CTX, CCD, and IAT

credit transactions will

be initially supported

– Payments Remittance

information mapping is

included

– Guidelines for returns

and exceptions is

included

The NACHA ISO 20022 Mapping Guide will allow financial institutions to better serve the needs of originators that are planning too or have adopted ISO20022

for accounts payable functions











11


2011- 2012 2013 - 2014 2014 - 2015 Future




Opportunity

Assessment

ISO 20022 for


ISO 20022 for


Full Compatibility

with ISO 20022



• Assess NACHA Rules update to require RDFI receipt of ISO 20022 XML

• Evaluate ACH Network infrastructure migration to ISO 20022 XML















12


NACHA ISO 20022 Tools

13

The NACHA ISO 20022 Tool and Guide were developed

with the helpful information provided by the following financial institutions and large global corporations:

Bank of America Bayer Bank of New York Mellon Citi

Deutsche Bank JPMorgan Chase Microsoft PNC

Wells Fargo US Bank

Why pain.001.001.03?

pain.001.001.03

Business Area: Payment Initiation

Message Definition: Credit Transfer

Variant: ISO20022 / European Payments Council

Version: 03

›Conforms to European Payments Council mandate

on SEPA

›Adheres to the recommendations of CGI – MP

›Dominant version in use in the U.S. market and

globally

14

Types of Messages in 2009 ISO Specification

15

From Customer to Bank

Credit Transfer: pain.001.001.03

Direct Debit: pain.008.001.02

From Bank to Customer

Payment Status Report: pain.002.001.03

Account report (intraday): camt.052.01.02

Account report (end of day): camt.053.01.02

Debit / credit notification: camt.054.01.02

ISO 20022 Catalogue of Messages

16

ISO 20022 Flow of Messages

17NACHA Guide supports only credit transactions (pain.001)

Debtor / Originator* Creditor / Receiver*

Debtor Agent / ODFI* Creditor Agent / RDFI*

Interbank Clearing and Settlement C

ust

om

er

Cre

dit T

ran

sfe

r

Cu

sto

me

r P

aym

en

t

Sta

tus

Re

po

rt

Ac

co

un

t R

ep

ort

ing

pain.001

pain.002 camt.05x

Cu

sto

me

r D

ire

ct

De

bit

Cu

sto

me

r P

aym

en

t

Sta

tus

Re

po

rt

Ac

co

un

t R

ep

ort

ing

pain.008

pain.002 camt.05x

pacs messages

Purchase

Invoice

*NOTE: RDFI / ODFI and Originator / Receiver are reversed when pain.008 is originated

ISO 20022 Flow of Messages

1818U.S. ACH Operators only transmit NACHA file formats today

Debtor / Originator Creditor / Receiver

Debtor Agent / ODFI Creditor Agent / RDFI

Interbank Clearing and Settlement

Cu

sto

me

r C

red

it T

ran

sfe

r

pain.001

Purchase

Invoice

CCD

CTX

IAT

NACHA File Formats

Translate

from ISO

20022 to

NACHA file

formats

Flow of information Flow of funds

Group Header (1..1)

Payment Information (1..n)

Credit Transfer

Transaction

Information (1..n)

Remittance

Information (0..1)

pain.001 XML File Structure

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<?xml version="1.0" encoding="UTF-8"?>

<Document

xmlns="urn:iso:std:iso:20022:tech:xsd:pain.001.001.03"

xmlns:xsi="http://www.w3.org/2001/XMLSchema-

instance">

<CstmrCdtTrfInitn>

<GrpHdr>

<MsgId>20110102-0000001</MsgId>

<CreDtTm>2011-01-12T09:00:01</CreDtTm>

<NbOfTxs>6</NbOfTxs>

<CtrlSum>20000.00</CtrlSum>

<InitgPty>

<Nm>Firm ABC</Nm>

<Id>

<OrgId>

<Othr>

<Id>1123456789</Id>

</Othr>

</OrgId>

</Id>

</InitgPty>

</GrpHdr>

NACHA ISO 20022 Guide

20

Block

ISO

Index

ISO

Field

Name

Tag

Level

Content

DescriptionMult Type

M /

O

Maps to

NACHA

Format Field

Mapping

Guide

Example – NACHA File Format

21

Company Name: ABHC CLM PMT CR

Company Identification: 1234567891

Originating DFI Identification: 987654321

Standard Entry Class Code: CCD

Company Entry Description: HCCLAIMPMT

Effective Entry Date: February 19, 2015

1 2 3 4 5 6 7 8 9

1234567890123456789012345678901234567890123456789012345678901234567890123456789012345678901234Example Data

5200ABHC CLM PMT CR 1234567891CCDHCCLAIMPMT 1502190001987654320000014

Company / Batch Header Record “5”

Example – ISO 20022 XML Format

22

<PmtInf>

<PmtInfId>011011</PmtInfId>

<PmtMtd>TRF</PmtMtd>

<PmtTpInf>

<SvcLvl>

<Cd>NURG</Cd>

</SvcLvl>

<LclInstrm>

<Cd>CCD</Cd>

</LclInstrm>

<CtgyPurp>

<Prtry>HCCLAIMPMT</Prtry>

</CtgyPurp>

</PmtTpInf>

<ReqdExctnDt>2015-02-19</ReqdExctnDt>

Non-Urgent / ACH payment

NACHA SEC Code

Company entry description

Effective entry date

Example – ISO 20022 XML Format

23

<Dbtr>

<Nm>ABHC CLM PMT CR</Nm>

<Id>

<OrgId>

<Othr>

<Id>1234567891</Id>

</Othr>

</OrgId>

</Id>

</Dbtr>

<DbtrAgt>

<FinInstnId>

<ClrSysMmbId>

<ClrSysId>

<Cd>USABA</Cd>

</ClrSysId>

<MmbId>987654321</MmbId>

</ClrSysMmbId>

<Nm>USA BANK</Nm>

</FinInstnId>

</DbtrAgt>

</PmtInf>

Company Name

Company Identification

Originating DFI Identification

7/18/201524






24


21

NACHA Payments Conference

Tom Durkin

Managing Director, Digital Channels

Bank of America Merrill Lynch

April 20, 2015

26

ISO-20022 XMLAdoption Landscape

A global, unified standard for messaging has the potential to enable efficient end-to-end processing across domains and geographies, promote STP and operational efficiencies in cash management, and overcome difficulties in multiple domestic and international standards.

The commitment to ISO 20022 implementation initiatives with major global clearing systems in Europe and other countries such as Singapore, India and Australia continues to drive the international momentum for adoption.

United States•Adoption driven by clients with global reach

Europe•SEPA Regulation migration deadline was in 2014 •Target 2 and Euro 1 testing is scheduled to begin with industry migrations target of November 2017

India•NG-RTGS is operational as the first ISO 20022 compliant RTGS system in the world

Singapore•ISO 20022 will serve as the messaging standard for G3, the low-value real-time payments solution

Australia•Intention to adopt ISO 20022 for the NPP (ACH) initiativeSource: KPMG LLP

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An architectural element of new Payment Systems and Market Infrastructures

For Treasuries: Facilitates multi-bank consistency

Increasing support by major TMS and ERPs

Simpler translation and faster troubleshooting

Choice of connectivity: direct H2H or SWIFT

Facilities Business Intelligence (BI)

For Banks: Single Euro Payments Area (SEPA)

Major payment systems within banks

Canada Payments Association and Federal Reserveexploring XML for E2E Remittance

Business case for US adoption performed by US Stakeholder group

Why ISO-20022 XML?Bank of America Merrill Lynch Leads the Way

Questions?

Robert Unger | Senior Director, Product Management &

Strategic Corporate Alliances

[email protected]

(o) 703.561.3913

Nasreen Quibria| Managing Director & Founder

[email protected]

(m) 617.388.6207

Tom Durkin| Managing Director, Digital Channels

[email protected]

(o) 312.904.7370






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mailto:[email protected]






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2015 nacha presentation - ach network roadmap for iso 20022

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