ADP calls on Canadian banks to get active on ISO 20022

Payments Canada recently released its Industry Roadmap & High-Level Plan for modernization, which includes the roll out of the ISO 20022 payment messaging standard across future payments infrastructure. We had the chance to speak with Bill Piggot, Vice President of International Money Movement at ADP Canada Co, about what this means for his organization, why other businesses in Canada should take note, and lessons learned from ADP’s ISO 20022 experience with financial institutions around the world.

Q: ADP is already using ISO 20022 globally. What advice do you have for Canadian financial institutions as they consider it?

A: My advice is to get on board now. The landscape is quickly changing and your large corporate clients need you. Plus, the demand is only going to get stronger as more businesses learn about the benefits of ISO 20022. I am concerned corporate Canada will start looking for support from international banks if our Canadian ones don’t move fast enough.

To add to that, most other jurisdictions have mandated ISO 20022 and, while we can’t predict the future, I would suggest it’s better to progress the standard now to fit into your business cycles than to wait for a hammer to drop and rush towards compliance. Our Global Product & Technology team had the foresight to adopt the standard in anticipation of the Single Euro Payments Area (SEPA) roll out back in 2009.  We readily saw the benefits.

I think it is fair to say that corporate Canada is well aware of how complex this change is and how many obstacles are in the way. We have been through it ourselves. But, as a country, we are better positioned than ever to bring IS0 20022 to life. We have learned from countries in Europe - adapting our plans to provide more flexibility in our remittance data, for example - and now is the time to drive progress.

Q: What are the biggest barriers to full adoption? What can Payments Canada do to address them?  

The biggest barrier to adoption is that everyone is focused on building a business case for ISO 20022. That doesn’t take into context the regulatory landscape and the opportunities that exist and it will make us chase our tails. I think the only way that we will see full adoption is if Payments Canada mandates it.

It has already been mandated in the European Union and is in the midst of being adopted by major economies including the US, UK and Australia. The world is moving ahead. We can’t afford to be laggards and we must start speaking the ‘lingua franca’ - a common payments language - with our major trading partners.

On the corporate side, the hold-up is likely to be with small businesses and in the large automotive and retail sectors where Electronic Data Interchange (EDI) is so deeply engrained in their Enterprise Resource Planning (ERP) systems for accounting and financial control. Education and awareness will be essential to encourage adoption. For these groups, it is about understanding the benefits both on a micro basis for the company itself and at the macro level for the country and the future of global commerce.  Interoperability is key as most major ERP systems and off-the-shelf accounting or business financial systems are already enabled with the ISO 20022 standard.

Q: What are your thoughts on Payments Canada’s plans to roll out ISO across the modernized infrastructure?

I was very pleased to see that the Industry Roadmap & High-Level Plan included ISO 20022 across the high-value payment system, the real-time payments capability and batch AFT payments. This is extremely important and I hope other businesses understand the value this will deliver. Expanded remittance detail will definitely serve many organizations well in their accounting reconciliation processes and ISO 20022 will make it easier for businesses to manage their banking relationships and partnerships. ADP has seen this firsthand.

Q: What else can Payments Canada do to help?

A: A concerted effort by Payments Canada to educate, build awareness and promote the standard within the various industry segments would help.  The Australia Taxation Office (ATO) had a great campaign that built awareness for their SuperStream program with clear deadlines for the phasing of the new standard.  They made effective use of billboards, magazine ads and a government mandate helped to drive the standard. The campaign was exemplary.

Payments Canada also needs to educate vendors of ERP systems, software accounting packages for small business, and other vendors to corporates so that those solutions are able to recognize and digest the Canadian ISO standard and drive the real value that comes from the data.  They need to understand how Canada has defined ISO and get this into their product roadmaps.