As arguably the biggest standards project in the payments space since the introduction of Swift FIN MT messages in the late 1970s, there has been a lot riding on the successful introduction of the new standard for exchanging electronic messages between financial institutions. Euromoney’s special series – Countdown to ISO 20022 – brings you opinions from experts about the current landscape and what to expect.
Given the global scale of the ISO 20022 transition, the market largely welcomed the decision to take a phased approach. Still, industry consensus holds that a firm cut-off date is essential to prevent ongoing maintenance burdens. The coexistence period, from March 2023 to November 2025, may seem prolonged, but it supports a smooth and coordinated shift. Key factors behind the expected success of the migration include the phased rollout itself, lessons learned from previous format changes and a client-first approach.
Success factor 1: Phased approach
The phased approach enabled banks to focus on go-live weekends in specific markets and learn from the process, derisking many of their activities. That is the view of Johnny Grimes, head of corporate cash product at Deutsche Bank, who says collaboration with peers and partners in the industry has been a major contributing factor to the success of large system changes. “We have carried out significant partner testing as part of our preparation work to give us a much better feeling for go-live readiness,” he adds.
This gradual transition helps in managing complexity and ensures that each phase is thoroughly tested and validated before moving to the next.
Counterparty readiness emerged as a key risk in the ISO 20022 transition; one that the phased approach helped to mitigate. “The Swift approach of using the in-flow translator to deliver both the MT and MX messages during the co-existence phase has been the most important enabler in ensuring a safe transition, reducing risk and the significant disruptions that would have occurred with a sudden approach,” highlights Michael Petrino, head of core payments platform modernisation execution at Citi Services.
The phased approach also gave banks the breathing room to take a more strategic view of ISO 20022. Rather than a one-off compliance exercise, the extended timeline allowed institutions to consider how the migration could support broader infrastructure modernisation. According to Lixi Cheng, product manager for international payments and ISO programme client readiness at BNP Paribas, the phased rollout enabled the bank to mobilise resources and plan its internal implementation in a more structured, staged manner. “This gradual transition helps in managing complexity and ensures that each phase is thoroughly tested and validated before moving to the next,” she explains. “It also enables us to adapt our systems and processes incrementally, minimising the risk of disruption.”
Success factor 2: Learning from the past
The replacement of Eurosystem with Target2 system with the new T2 platform in 2023 provided banks with a valuable opportunity to learn and adapt ahead of the ISO 20022 November deadline. “The lessons learned from this migration included the importance of thorough planning, extensive testing and robust communication with all stakeholders,” BNP Paribas’s Cheng adds.
Mahesh Kini, global head of cash management at Standard Chartered, suggests that the transition to ISO 20022 is more complex than the move to T2 in Europe or the Clearing House Interbank Payments System in the US as it involves counterparties beyond national or regional borders. In response, the bank has set up technology and operations support, communication protocols and command centres across multiple timezones to accommodate global clients and counterparties.
Success factor 3: A client-first approach
Many corporates have already embraced the ISO 20022 format for payment initiation and reporting, but significant potential remains untapped. A large segment of the corporate market continues to rely on banks for guidance, still working to understand the full benefits of ISO 20022 and what internal changes are needed to unlock them.
By combining the ISO programme with a payment platform uplift we generate a better set of features for our clients, internal operations and compliance teams.
ING has been actively advising these companies to transition to the latest PAIN and CAMT message versions to improve reconciliation and streamline processes. However, the pace of adoption varies across Europe. In Belgium, for example, many corporates continue to use the domestic CODA format, while in Germany the market is already shifting toward CAMT v8.
“We see that we are now entering the pivot point where corporate demand is growing to move towards the richer formats to better use banking data in finance operations,” says Annelinda Koldewe, global head of payments and cash management at ING. “While encouraging the adoption of ISO 20022, we will continue to support legacy payment formats unless it is necessary to change due to other requirements such as structured address.”
Standard Chartered enriched its CAMT reporting, leveraging the enhanced ISO 20022 field. “The build out formed part of our continued system modernisation plan and by combining the ISO programme with a payment platform uplift we generate a better set of features for our clients, internal operations and compliance teams,” Kini notes.
Uncertainty remains around the acceptance of MT messages beyond the November 2025 deadline, with differing views across the industry. JPMorgan Payments, for instance, does not anticipate receiving inbound MT103 or MT202 messages after the cut-off, expecting additional validations that could lead to messages being ‘not acknowledged’ (NACK’d). Lloyds, on the other hand, is looking to continue to accept MT messages, provided they are permitted within the network.
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