Contributor: Andrew Owens
In the corporate payments space there are acronyms or phrases that we hear again and again. SWIFT, eBAM, ISO20022, SEPA, and SCORE are some obvious examples and another that has muscled in over the last year is CGI, which stands for Common Global Implementation.
So just what is CGI and why should you be interested? Well, certainly if you work for a global corporate that’s multi-banked, dealing with multiple payment types across different geographies, CGI is an interesting proposition.
Before looking at CGI, it’s worth mentioning ISO20022. Released in 2004, ISO20022 is a common methodology for defining financial messages and a common business repository from which those messages are produced. One key goal of the ISO 20022 initiative was to have the same message for all types of credit transfers and to ultimately offer the corporate the potential to move away from having to construct the same basic payment information differently for different payment instruments.
There are some problems (or should I say challenges) with ISO20022 – more on that later…
Common Global Implementation
OK, so back to CGI. The Common Global Implementation is really two things. Firstly, it is a forum for banks, corporates and vendors to discuss various corporate to bank implementation topics related to ISO20022. And secondly, the aim is to simplify the implementation of ISO20022 based messages to promote wider acceptance within that corporate to bank space.
If they succeed in their mission, there are real benefits to be had. The idea that a corporate can use the same underlying message structure for all their payments with all of their transaction banks reaching any payment system across the globe is surely enticing. That means dropping all those different ACH and international formats and replacing them with a single message framework that can be used globally with all of your banks. With one message framework you can not only hope to greatly reduce the complexity and costs associated with your corporate to bank landscape, the considerable barriers of doing business with new banks and in new markets will also diminish.
Right now the scope covers credit transfers, direct debits, payment status feedback and cash management (statements). The implementation guidelines for credit transfers and status feedback are published and so I expect that we will start reading about some corporate implementations soon.
Will it Work?
Pessimists amongst you might question the viability. You might say that banks will always want to compete in this space, that ISO20022 is too complicated and that without regulation it will go nowhere. I think some of this can be answered by coming back to the problems with ISO20022 and how CGI seeks to address them.
Firstly, the ISO20022 XML Credit Transfer message is huge. It has hundreds of fields, many of which are rarely used. CGI includes a subset of those fields to make things simpler. Furthermore, the receiving bank distinguishes between data it does and doesn’t need to see, easing the burden on the corporate. Finally, there is agreement between the banks on what is ‘standard’ and what is left for value-added services, allowing for competition within the overall collaboration.
CGI have taken several principles from SEPA in developing a standard that is implementable. CGI has the backing of the major cash management banks, so adoption on the bank side looks likely, if not certain. But ultimately, in the absence of regulation and an ‘end date’ for adoption (I’m referring to SEPA here), CGI will be successful only if the business case is strong enough. I believe it is. I believe CGI could eventually allow us to move away from such a focus on formats towards a greater focus on creating business value in the corporate to bank space.