ISO 20022 Migration for the Australian Payments System –
Issues Paper – April 2019 6. Strategic Issues – Project Governance

6.1 Governance

The successful adoption of ISO 20022 as the modern global messaging format standard for payment messaging will require significant industry effort, leadership and coordination. The RBA and APC recognise that individual participants will each have different costs and challenges and that the benefits of an ISO 20022 migration may be realised more readily for some than others. A strong governance framework is necessary to work towards a cooperative outcome that takes into account the public interest in providing efficient and competitive payment systems. The following governance principles, developed for the NPP project and formalised in the core criteria, may be an appropriate starting point for determining the governance framework of an ISO 20022 migration project: ^[5]

• The governance arrangements should have an effective decision-making framework, be focused on outcomes, and have in place mechanisms for clear accountability for all decisions taken.
• All decisions regarding the delivery of project outcomes should take into account public interest considerations.
• The project governance arrangements should identify, document and address real or perceived conflicts of interest in terms of representation, influence and decision-making.
• The project governance arrangements should be overseen by a steering committee with an independent chair and representation of industry stakeholders (with appropriate decision-making authority) catering for the interests of large, medium and smaller institutions.
• The project governance arrangements should include a process to allow feedback from industry stakeholders not directly represented on the steering committee.
• The project governance arrangements should adopt a formal project management methodology and have a communication plan in place to provide all project stakeholders with relevant information on a regular basis.
• There should be a fair, transparent and objective process for the selection of any consultants appointed.
• There should be a project assurance role undertaken by an independent body before key milestones, e.g. as was undertaken to review the proposed NPP payment infrastructure and network.

The RBA and APC are committed to undertaking the consultation stage of the ISO 20022 project to coordinate industry feedback on key strategic decisions to develop a final roadmap for migration.

Following this stage, there are a number of potential governance structures that could be used for the ISO 20022 migration project. A funding model will need to be determined and this is likely to be dependent on the governance structure adopted. There are at least five main groups that could play some role in the governance and the RBA and APC are interested in industry feedback on the extent of involvement and preferred roles for each of these parties:

• PSB and APC – these peak oversight bodies for the Australian payments industry can provide strategic direction and endorsement of strategic direction for industry development. One or both of these groups could play a role as the sponsor of the project.
• Industry and AusPayNet – the industry has the technical expertise to lead the technical stage of an ISO 20022 migration. Without an existing structure, however, there may be difficulty in the industry coalescing on its own to establish a governance framework. One possible industry-led approach is for AusPayNet to coordinate the technical industry governance structure, drawing on membership across relevant clearing systems.
• Consultants – consultants are able to impartially engage with industry participants, and work closely with all stakeholders to implement the technical build that meets the needs of individual payment participants as well as the wider payments industry. Consultants can also provide specific expertise in project management and coordination, though this expertise comes at a cost. This approach was effective in the NPP project.
• RBA – given its roles as RTGS operator and regulator of the payment system, the RBA could continue to assist in playing a coordinating role in conjunction with the other parties. The RBA will need to be a participant in the project to upgrade its own financial market and banking operations systems ISO 20022.
• SWIFT – given SWIFT's role in setting messaging format standards and facilitating domestic and international payments across SWIFT networks, SWIFT could provide a key role in providing technical expertise and coordinating the ISO 20022 migration in Australia.

Footnote

These governance principles are based on the ‘RBA Core Criteria for a ‘Fast Payments’ Solution’, available at: https://www.rba.gov.au/payments-and-infrastructure/payments-system-regulation/past-regulatory-reviews/strategic-review-of-innovation-in-the-payments-system/201211-rba-core-criteria-fast-pay-solution/pdf/solution-112012.pdf. [5]