Why does your firm support and partner with ISITC?
For us it is critical to work closely with the main standards organizations and market practice setters such as ISITC. ISITC brings a unique perspective since member firms cover most aspects of the financial services, facilitating the dialogue between professionals working from trading to settlements. TradeHeader has extensive expertise in financial messaging standards such as ISO 20022, FIX, FpML, and ISDA CDM. We don’t just know these standards – we are closely involved in their design, their evolution and their stewardship – and are proud to partner with like-minded organizations who share this mission.
What are the main challenges the financial industry faces?
In recent years, there has been an important increase in automation. However, the impact of connectivity within and between firms is still very present and it remains a very important issue. Firms still face challenges around data quality and standardization. We are introducing AI and blockchain technology in some processes, but at the same time firms are still missing critical data to report a transaction. We need to introduce technology that brings value to our organizations and at the same time we need to focus on improving our data quality and integration, internally and externally.
What are the challenges with connecting multiple firms?
The integration budget may rise exponentially if there are no set standards between firms, so there is a great opportunity and need for the use of open electronic standards that financial professionals can share and use freely. A good example of this will be ISO 20022 for Cross Border Payments. This will be a global change that will impact many organizations, not only financial firms. Most firms are not accustomed to the use of standards and common practices, and we think partnering with organizations such as ISITC plays a critical role in driving these global changes forward.
What are the trends that will have an impact on the industry in the upcoming years?
From a standards perspective, we think the use of ISO 20022 will increase in two areas: regulatory reporting and payments. We think regulators will aim for more consistency in the data they receive and will try to unify the data formats they process. ESMA in Europe is already using ISO 20022 for regulatory reporting. CFTC has also shown some signs that they may use it in the future. We think other regulators globally will follow. On the payments side, as mentioned before, the migration from MT to ISO 20022 will have a major impact on the financial services industry. Even though SWIFT has delayed the migration deadline, the “devil is on the details” and cannot delay their preparation for the migration.
From a technology standpoint, the decentralization of services with the implementation of microservices accessible through Application Programming Interfaces (APIs) will keep expanding. From our recent experience, the use of specialized services that provide automated functionality has major data quality benefits and cost reductions. The use of open formats to access these APIs is critical so the relevance of common financial standards prevail. ISITC has a key role to ensure that standardization is applied to these new areas of technology.