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The final steps to achieving a perfect XML data schema
Executive Education / 27 June 2023
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Lecturer
Axel Jäger has been a Payment and Cash Management specialist since 1995, as well as a lecturer in the Certified Payment Professional certificate course.

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Cum ergo incipit? So when should we start? A question which corporate treasurers, accountants and IT staff can expect to hear more and more frequently from their business banks in the coming months.

For several years – and especially since the introduction of new XML formats for payment transactions – German companies have been under growing pressure to adapt their accounting and treasury applications to the new realities.

Transitioning from the old DTA standard to the new XML formats

Since 2014, companies and their banks have been required to exchange payment files based on the new ISO 20022-compliant XML schema. This transition from the familiar old DTA cross-border payments standard to the newly prescribed XML formats has been just as challenging as the requirement to regularly implement the latest EPC rulebooks.

For the last few years, banks have been offering their corporate clients the option of receiving electronic bank statements in XML format. Unlike payment files, however, companies are under no obligation to process their statements in XML format – at least, not yet! The various committees of the German Banking Industry (Deutsche Kreditwirtschaft or DK) have decided – in agreement with SWIFT – to phase out the widely popular SWIFT MT940 format (also known as the SWIFT customer statement message or CTM). This means that as from November 2025, banks will no longer be required to provide statements in MT940 format, only in XML format (camt.053).

So: the clock is ticking! While there are still 30 months to go before this changeover comes into effect, industry experts estimate that it will affect around 90 percent of businesses. In other words, only around one company in ten has put in place an accounting system based entirely on the new XML format – or more precisely, on the new XML schema, with no structural omissions or errors.

What will this migration mean?

First, companies must instruct their banks to provide bank statements in camt.053 format. Many banks are prepared to provide clients with bank statements in both formats, MT940 and camt.053. The benefit to clients is clear: during the testing and implementation phases, their banks will be providing them with data on actual, posted transactions in both formats. They can then use this data for purposes of comparison while they are still testing their accounting or treasury management software, before the company is obliged to implement it in a real-world production environment.

Upgrading the software itself to a version capable of handling the latest XML formats is, of course, even more important than sorting out test data. This means that wherever possible, companies should start by installing a software update or upgrade capable of handling camt.053 files.

In some cases, software developers may no longer offer standard reports that automatically map data to the equivalent tables – they may use transformation stylesheets (XSLT) instead. In turn, these will probably only match around 80 percent of the required fields; human intelligence is required to teach the remaining 20 percent to “the machine”. The fact that these transformations may have to be carried out on a per-bank basis is yet another hurdle, given that the quality of data supplied by each bank may vary.

A little while ago, a SAP implementation manager expressed doubts about being able to manually map data in a test environment, so it is possible that the remaining 20 percent will have to be “taught” to the machine in actual operation, based on trial and error. This would mean that for a transitional period, automated clearing rates – currently up at 98 percent – could drop to as little as 70 percent. Consequently accountants would have to manually post any items that were not assigned automatically. While this workload might be manageable for a limited transitional period, it would certainly not be a viable long-term solution, especially for batch payment operations.

Other hurdles could further complicate this migration:

  • the company uses different versions of the same accounting software (e.g. for accounts receivable, accounts payable, HR functions),
  • documents are generated in different versions of the camt.053 standard (02 vs 08), and/or
  • the company’s ERP or TMS systems require additional customisation.

So it is reasonable to assume that a medium-sized company should ideally allow at least 4-8 months to fully implement all these impending changes.

Bottom line: tempus currit – time flies!

Payment operations have become one of the major issues facing the banking industry and business sector. What companies in the industrial and financial sectors really need are regular knowledge upgrades covering the latest developments and future trends.

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