What are the challenges and opportunities of SWIFT ISO 20022 migration for cybersecurity?

In my experience, working with a true pioneer when it comes to quantitative finance and building a model (began in early 80s): a.) fundamentals, were huge (although an open mind to run various regression and correlation calculations were available. It really was amazing. But let’s step back!!!! ? INTERNAL CONTROLS ? ROBUST BACKUP ? **DATA INTEGRITY** - Multiple robust sources are needed! ? NEED ‘Center of excellence for data Integrity’ a.) a developer with a strong finance background, and even experience is probably ideal. b.) even though not the topic, you need someone who understands the actual end-user. Product managers are the best. But of course, they must have the unique experience!

To quote an executive at SIBOS 2023, “If data is the new oil, then ISO 20022 is going to be the kerosene that ignites it”. While ISO 20022 offers significant benefits, you are right to highlight the implications for data security and resilience, especially considering the severe financial and reputational damage even minor breaches can inflict. Threat actors are constantly exploiting digital supply chain vulnerabilities and security loopholes, weakening traditional cybersecurity measures. Financial institutions need a two-pronged approach: combining established data security practices with proactive AI-powered solutions that leverage anomaly detection, threat prediction and other capabilities to adapt to the evolving payments landscape.

As institutions migrate to the new standard, investing in data analytics and intelligence tools and skills is crucial because it will allow financial institutions and service providers to analyse the rich amount of data transmitted in ISO 20022 messages. FIs and corporates can gain a better understanding of their customers' needs, preferences, and behaviors, as well as identify trends and patterns that can inform business decisions. These insights can help financial institutions and service providers to develop more targeted marketing strategies, improve risk management, and enhance customer experiences.

This is fantastic in that it can help weed out bad actors. It becomes standardized and less vulnerable to subjective interpretations. Of course, you still have to draw a line, such as 'what point does a pattern become flagged for fraud?' However, it allows for consistency and over time, as everyone gains experience and exposure, those sort of judgment calls will be more and more accurate, as fraudulent behavior is uncovered. We will be able to look back and see trends, which will finetune oversite and create a clear picture. Besides, bad actors will always evolve to sneak by and we just evolve right alongside. On a separate note, as a person who appreciates data and drilling down, this is very useful to me!

My mind was blown when I realized that not all brokerage firms or custodian banks, understood the difference of dividends, and who should actually be credited for the dividend. I found custodians and brokers to be using ‘Record date’, when in fact, ‘EX-DATE’ is what matters! Trade Ex = WITHOUT (price adjusted via mkt) Seller KEEPS dividend because name trades at a discount. If it’s a two dollar dividend, you’ll be trading at yesterday’s price (Less: $2/shr & other stock or market specific changes) —— BUYER does not get div, because the price is discounted to receive that equity share, less the dividend. Takeaway: you need someone who truly understands that! So, however, that can be done! Really have to spell it out sometimes.