Implementing ISO 20022 for long term profitability: A machine learning approach.

Abstract

ISO 20022 is a significant financial messaging standard, considering the plethora of benefits
it can bring to an organization. Apart from the several advantages of this messaging standard like that of
the interoperability, efficiency, and automation benefits, ISO 20022 can actually impact the profitability
of an organization for a long-term period. In this paper the positive impact of ISO 20022 has been
assessed by performing a paired hypotheses testing on several banks for both the periods before and
after the implementation. Furthermore, time based machine learning models like regression and random
forest have been framed on these financial parameters to examine the significance of choosing ISO
20022. The expenses involved in this migration process has also been accounted for to evaluate the
tradeoff between the expenses incurred and the benefits reaped in this transitional journey. Finally based
on the results obtained it has been concluded that ISO 20022 can significantly increase the net-income
and assets for any financial institution by a greater extent than that of the costs associated with the
migration process thereby ensuring a long-term profitability.