Wednesday, May 29th, 2024
After numerous delays, Swift began the migration of its system onto the new ISO 20022 standard on 20 March 2023. Here’s what happened, what it means for cross-border payments and an update on how financial institutions are adapting to the change.
March 2023 was a transitional month for banks, as Swift finally began the migration of its cross-border payments system onto ISO 20022 – the global standard that aims to standardise how payment messages are sent worldwide.
Under ISO 20022, financial institutions are changing the payment messages they send and receive via Swift from the legacy MT (message type) format to the new MX (message type XML) format, which is more transparent, holds more data and is expected to boost interoperability between banks.
In a nutshell: if banks are all sending messages that are structured in line with Swift’s cross-border payments and reporting (CBPR+) guidelines, the communications behind these payments will be more efficient, more transparent and ultimately lower costs.
In this piece, we explore everything payments professionals need to know about ISO 20022, including what it is, the challenges involved and what this transition might mean for cross-border payments. We also find out how many financial institutions are now sending and receiving ISO 20022-compliant messages via Swift, and explore how this has changed since last year.
Note: This article was updated in May 2024 with additional information to provide further context on how financial institutions are faring with ISO 20022 adoption. It was originally published in February 2023, using comments provided by experts from Lloyds, HSBC and Deutsche Bank in late 2022.
Contents
- What is ISO 20022?
- Why is Swift only adopting the standard now?
- When will ISO 20022 go live?
- Why are MT messages being replaced with MX messages?
- What have financial institutions been doing to prepare for ISO 20022?
- What are the benefits of ISO 20022 adoption for cross-border payments?
- The challenges with ISO 20022 migration
- Will banks/financial institutions adopt ISO 20022?
- How many institutions are sending ISO 20022 messages?
- Conclusion
Joe is a Senior Copywriter at FXC Intelligence, writing and editing reports, news and analysis to support the company’s weekly content and client projects. Before joining FXC Intelligence, he worked as a B2B copywriter, journalist and editor covering a broad range of topics, including technology, transport, retail and the food and beverage industries. He has a BA in Philosophy from the University of Warwick.
