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Fighting Fraud With ISO20022 Financial Messaging Standards

Shashi Suraj Jadhav

Senior Business Analyst, Payments, Synechron,

Payments

In today's digital age and world of complex payments, data security is more important than ever before. Fraud is a serious problem. ISO20022 is a new standard for financial messages that aims to fight fraud by providing a more secure and efficient way to send and   receive payments.

ISO20022 is an international standard for financial messaging that aims to facilitate global interoperability between financial institutions. It is based on the XML (Extensible Markup Language) standard and comprises a set of rules for how data should be structured and exchanged. XML is a more secure and reliable way to exchange data than the traditional EDI format.

XML is also easier to read and understand, making it easier to detect and prevent fraud. ISO20022 is already being used by some of the world's largest banks and financial institutions, and is expected to become the new standard for payments worldwide.

ISO20022 is the most secure format available because it uses XML – the highly secure format that is difficult to hack or tamper with -- to format payment messages. In contrast, message structures, such as SWIFT MT, use a less secure format that is easier for hackers to exploit. This is why ISO20022 is the preferred format for payments today.

 

Exploring benefits

There are several reasons why the ISO20022 formats are more secure than older methods of payments and can help reduce the risk of fraud and ensure that payments are processed smoothly and efficiently:

  • ISO20022 formats use digital signatures to authenticate the sender and receiver of the payment. This means that the payment cannot be tampered with or forged without the digital signature being broken.
  • ISO20022 uses encryption to protect the payment information. This indicates that even if the payment is intercepted, the information contained within it cannot be read or used by anyone without the proper encryption key.
  • ISO20022 formats are constantly being updated to reflect the latest security developments. This reveals that any new security threats that arise are quickly addressed and incorporated into the ISO20022 formats and it becomes very difficult for criminals to exploit any vulnerabilities in the system.
  • ISO20022 payments are sent using secure channels, such as the SWIFT network, which adds an additional layer of security.
  • ISO20022 allows for the exchange of richer data than previous financial messaging standards. This enables more information about the payer and the payment itself, including the payer's name and address, as well as information about the payment purpose which helps verify the legitimacy of the payment, and the identity of the payer. 
  • ISO20022 provides a data exchange standard that can be used by all financial institutions allowing better data sharing and collaboration between institutions, which will in turn help to identify and prevent fraud.
  • ISO20022 will help to improve the efficiency and accuracy of payments, which helps reduce the incidence of fraud.

 

Want to learn more about Synechron and its full spectrum of Payments capabilities, including more information about how your firm can best migrate to the ISO20022 financial messaging standard? Contact: Shashi.Jadhav@synechron.com

 

The Author

Rachel Anderson, Digital Lead at Synechron UK

Shashi Suraj Jadhav, Senior Business Analyst, Payments at Synechron is a Financial Compliance Professional with more than 16 years of experience in the banking domain. She specializes in Payments across the FCR (Fraud, Compliance and Risk) space. She is an Engineer, but a Business Analyst at heart.

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