How we helped Nigeria to Migrate to ISO20022
ISO 20022 is set to become the language for cross-border payments worldwide. With the November 2022 deadline looming, institutions seeking to implement the new standards face steep learning curves. However, what if customization to the local market was also a challenge?
This is the situation that the Nigeria Inter-Bank Settlement System (NIBSS) found itself in. Thanks to our expertise, not only was NIBSS able to navigate the complex world of payment standards, but they are now in a position to decrease their members' migration timelines significantly.
In this case study, we will highlight how Payment Components helped NIBSS:
- Successfully bring Nigeria to the latest age of payments
- Reduce the complexity involved in payment systems migration
- Help their members experience a simplified migration experience in the future
- Cost-effectively adopt industry best practices
The Beginning - ISO 20022 Migration Poses Challenges
Payment systems messages are moving towards a new global standard called ISO 20022. These standards are the result of an unprecedented degree of collaboration between SWIFT and central banks worldwide.
For cross-border payments, banks and financial institutions are expected to begin using the new standards, termed CBPR+, by November 2022 with a grace period of 3 years. Eventually, these new standards will replace SWIFT MTs.
The new standards address several operational issues such as high operating costs, lack of interoperability, difficulty supporting new payments services, etc, and compliance issues such as a lack of quality data, missing critical information, and unstructured data in messages. Standardization will reduce costs and allow banks to revamp their business models.
However, migrating to ISO 20022 poses significant challenges, and NIBSS was no exception. Here are the challenges it faced:
- Highly technical mapping. Mapping SWIFT MTs or other proprietary messages to ISO 20022 is not a one-to-one task, and NIBSS had to understand the significance of new data fields.
- Unique needs of the Nigerian market. NIBSS needed a world-class system that could handle the local market's needs.
- The prospect of devoting significant resources without a stress-tested roadmap. In-house expertise needed assistance anticipating issues and acclimating to new technical conditions.
Delaying migration to new standards would have left Nigerian banks without the immense benefits that ISO 20022 brings. To successfully migrate on a compressed timeline, NIBSS needed an expert that could design a robust system and help implement a solution. It needed a firm with the kind of experience Payment Components possesses.
The Turning Point - Leveraging Prior Experience to Address Unique Needs
Payment Components demonstrated its deep experience during the RFP process and was tasked with designing and delivering NIBSS all necessary API libraries. Along the way, we also helped NIBSS understand the magnitude of the challenge it faced, and demonstrated how to overcome them.
From the beginning, we resolved to offer NIBSS more than a software solution. We aimed to decrease NIBSS' time to market and help it adopt best practices that would anticipate and accommodate change well into the future.
We gained NIBSS' trust by showcasing our product through our online service FINaplo. Payment Components' impressive client roster also convinced NIBSS that its project was in safe hands. Here are the initial steps we took when designing a solution:
- We relied on our rich experience working with standards like SEPA, CBPR+, and other ISO 20022 schemes.
- We reviewed NIBSS' business requirements to create a map of the features needed.
- We transferred lessons from our successful experience with SEPA to develop a tailored solution that delighted NIBSS
No implementation is without challenges, and this project was no exception. A major issue that reared its head was deciding which base version of ISO 20022 we would use. After much deliberation, we felt the latest version of ISO 20022 offered the best combination of upgrading current business and offering the most benefits for the future.
Another unique challenge we encountered was aligning NIBSS' ISO 20022 with the Pan-African ISO20022 version (PAPSS.) After intensive research, we managed to successfully design and implement an interoperable framework.
The Results - Go to Market Ahead of Schedule
Our 20+ years of experience in payments helped us deliver a solution well ahead of the agreed-upon deliverable date. In addition, we constantly advised NIBSS regarding industry best practices, helping them achieve short go-to-market times.
Here are the benefits our experts delivered to NIBSS:
- Successful implementation ahead of schedule
- Deep knowledge of best practices
- Empower NIBSS members to decrease significantly the go-to-market time
- Achieved interoperability between NIBSS and PAPSS frameworks
- Support NIBSS & its ecosystem also with the CBPR+ adoption
The Bottom Line
NIBSS plays a central role in Africa's largest economy. Its migration to ISO 20022 will play an important role in the local and regional financial industry, turning Nigeria's banking system into a shining example for the rest of the world.
Thanks to Payment Components' expertise, design and implementation were smooth, helping NIBSS realize a successful and cost-effective migration.