Preparation underway for the migration to ISO 20022 standard in the relevant sector?
In the rapidly evolving world of cross-border payments, banks are racing to comply with the upcoming ISO 20022 standard by the November deadline. This transition, which promises improved interoperability, efficiency, transparency, and customer satisfaction on a global scale, requires a strategic approach.
To develop a robust cross-border payments strategy for ISO 20022 compliance, banks should consider the following key steps:
1. **Assess the Current Payments Landscape:** Review existing payment journeys, processes, and IT architecture to identify gaps in handling ISO 20022 messages, particularly SWIFT CBPR+ (Cross-Border Payments and Reporting Plus) messages. Perform an independent expert audit of payments infrastructure and back-office systems to ensure readiness for native ISO 20022 support and to verify that business processes and flows are correctly mapped.
2. **Build Capability for Handling ISO 20022 Messaging Standards:** Develop or upgrade systems to process and generate ISO 20022 format messages alongside maintaining support for legacy SWIFT MT formats at least until November 2025. This allows for a smooth migration phase. Enable handling of richer, structured data fields that improve payment transparency, reporting, and straight-through processing.
3. **Align with Key Industry Deadlines and Standards:** Target compliance with mandatory migration dates such as the November 21, 2022, CBPR+ adoption by SWIFT participants and November 2025 for full SWIFT ISO 20022 adoption. For Federal Reserve wire payments in the U.S., ISO 20022 compliance deadline is July 14, 2025. Participate in relevant industry initiatives and groups to maintain compliance and interoperability.
4. **Enhance Operational Efficiency and Risk Management through Automation:** Leverage ISO 20022’s ability to include detailed, structured transaction data to automate reconciliation, reduce manual intervention, and lower operational costs and errors. Implement robust fraud detection and compliance checks enabled by richer payment data, supporting secure and transparent cross-border transactions.
5. **Develop Customer-Facing Capabilities and Multilateral Interoperability:** Improve customer experience by enabling better remittance information and faster settlement times, especially for B2B and payroll cross-border payments where timely, accurate payments are critical. Ensure systems support multiple currencies and fair exchange rate handling to facilitate international transactions efficiently.
6. **Conduct Extensive Testing and Validation:** Before full go-live, banks should rigorously test their ISO 20022 messages and system interoperability with partners to build confidence in the quality and accuracy of migrated systems. Continuously monitor performance post-implementation to resolve any issues quickly and maintain compliance with evolving ISO 20022 standards.
As the industry approaches the November deadline, many major institutions have made considerable progress in adopting ISO 20022, but some still have significant work to do. Swift expects its top 175 senders, who are responsible for 86% of its payment instructions, to complete the move by the deadline. However, the Federal Reserve has pushed back its implementation of ISO 20022 for its Fedwire Funds Service from March to July, citing insufficient customer readiness and industry requests.
The adoption of ISO 20022 for cross-border payment messages has increased significantly, with over 165+ countries sending and over 220 receiving with the new standard. To reach Swift's target of 40% for the end of Q1 2025, adoption will need to increase by five percentage points. Swift has seen a growing adoption of ISO 20022, with a global daily average of 1.54 million ISO 20022 payment instructions sent on its FINplus service in February 2025.
Success stories in the adoption of ISO 20022 include Barclays, the Bank of Cyprus, DBS Bank, and Diamond Trust Bank. Lucy Ingham is the author of this article.
[1] Swift, "ISO 20022 Migration: A Guide for Banks," 2021. [2] Swift, "ISO 20022: Enhancing Cross-Border Payments," 2022. [3] Swift, "ISO 20022: Improving Payment Transparency and Efficiency," 2023. [4] Swift, "ISO 20022: Achieving Sustainable Cross-Border Payments," 2024.
In the strategic approach for adapting to the ISO 20022 standard, banks can investigate the finance-related aspects of their present payment landscapes and make necessary adjustments to process and generate ISO 20022 format messages. This evolution will necessitate the assessment of existing payment journeys to enable a smooth transition and ensure readiness for native ISO 20022 support.
Furthermore, the finance industry is anticipating improvements in interoperability, transparency, and customer satisfaction as banks continue to develop strategies for upgrading their systems to meet the ISO 20022 standard, ultimately leading to more efficient global cross-border payments.
