Faster, further and stronger with ISO 20022: the outlook for 2024 and beyond

The road to ISO is paved with good intentions

End users should not be left out: the sooner they too switch to an ISO standard with richer and better-structured data, the sooner they will in turn benefit from “frictionless” payment experiences, thanks to fewer errors, fewer payment message repairs and fewer untimely stops to transfers for in-depth regulatory checks.
ISO 20022 is the opposite of “garbage in, garbage out”: it’s “quality in, quality out”! It is in the interest of all players in the payment chain to be able to process high-quality and properly structured information. This already requires a precise inventory of the databases available to all parties. This is because the granularity of structured data permitted by ISO may not always be available on legacy systems. It may therefore be necessary to carry out remediation work on the repositories of certain applications. 

The possibility of having revamped and improved databases that can contain rich, structured data will be particularly important if you use several market infrastructures to deal with different currencies. Even if all the stakeholders wish to strive for maximum interoperability, the reality is often very different. Although the need for interoperability between systems means that we have to move towards common rules, some minor discrepancies may remain. And the more or less strict application of controls relating to these rules, depending on the market infrastructure, can lead to disruptions in the processing of payments. Slowdowns, extra costs…the very opposite of the reason for introducing the new format!
It will still take time and effort to achieve the maximum and global harmonisation we want! In the meantime, the tests will allow you to detect problems upstream, and to launch workshops with your partners to resolve any difficulties encountered. And to implement the most appropriate change management with your bank clients and end-users. The latter is fundamental: thanks to the proper instruction of your bank clients. 

 “ISO migration could be a fantastic opportunity to change any bad habits you might have picked up with old message formats! If everyone plays the game, payments will be much smoother and straight-through processing rates will improve for the benefit of all players in the payment ecosystem.” Céline Riber, Head of Cross-Border Payment & Foreign Exchange Transformation

It is therefore vital to meet the migration deadline of November 2025. As long as the old message formats coexist with the new ISO messages, our back and middle office staff will have to deal with complexities on a daily basis. Despite having migrated in March 2023, we still find that adjustments are necessary today. Rules established at a late stage and last-minute adaptations may have led to the various ISO tags being filled in incorrectly. And the fact that different jurisdictions migrate at different times means that conversions have to be made between messages in the old format and those in ISO, which adds an extra layer of complexity, even more so for intermediary banks.

The ISO adventure is just beginning 

In fact, the ISO story will not end in November 2025. On the contrary, the ongoing migration is the starting point for new developments designed to make our international payments faster, easier to use and more efficient. The payments industry has already set out its roadmap with additional work, which will focus in particular on the processing of account statements, Exceptions and Investigations (“E&I”) and “RMA authorisations” .

“The industry has focused on migrating payment messages, but there is still work to be done on transaction and account statement messages.” Laurent Collinot, Product Manager

This is a market issue; there is no real harmonisation and a strategy on how to migrate these messages to ISO 20022. And let’s be honest, client demand remains weak today. However, this is not a trivial matter; it is more than a simple transcription exercise. It raises a number of major issues, because “rich” messages in ISO format can generate several messages in legacy format, leading to potential problems with sequencing, tracking and writing numbers in our clients’ infrastructures.
With regard to Exceptions and Investigations, the plan to migrate to structured messages by the end of 2026 is ambitious. But it may revolutionise the way back offices are run, by drastically reducing the number of payment frictions. Structured information will make it possible to streamline the bank’s systems by limiting human intervention. Orchestration will guide demand directly to the appropriate player, thus removing from the circuit the players who are currently involved without being able to add any value. Saving time and improving operational efficiency. We will be able to isolate and deal with different use cases by triggering operating rules. In this way, an acknowledgement of a request for the return of funds can be generated automatically. 

Finally, the migration to ISO 20022 is accompanied by a new granularity for RMA authorisations, even for those that already existed with legacy messages. From now on, RMAs will have to be managed at “business profile” level, which encompasses sets of messages grouped together in a coherent way for a given activity, and not just at message category level. This radical change is particularly significant for Banking Information Systems. All message types will therefore require special RMA attention. Account statements will be subject to RMA authorisation¹. This was not the case before.

ISO harmonisation: let’s hope it lasts!

The migration of payments and cash management reporting to ISO 20022 is a real opportunity for the payments industry to harmonise its message formats (versions, variants, etc.) and above all its rules for using messages.
The HVPS+ Market Infrastructure Practice Task Force, made up of central banks and other payment system operators, commercial banks and the Swift interbank cooperative, has given substance to the usage guidelines. There may still be some local variations, but the whole is already very largely harmonised.
The CBPR+ group has done the same for Correspondent Banking requirements. CBPR+² and HVPS+³ have also been actively working on the synchronisation of ISO versions used for Correspondent Banking and by the various market infrastructures. 

But what can we do to prevent all these harmonisation efforts from collapsing after 2025?! Well, we need to put in place a maintenance and appropriation process for the new ISO 20022 versions, which will incorporate new messages. With rare exceptions, HVPS+ and CBPR+ use an ISO message version dating from 2019. The new coordinated development process will begin this year, in line with the annual maintenance schedule for ISO 20022 messages.

It provides for the collection of change requests and the implementation of a synchronisation stage dedicated to these subjects between the groups responsible for maintenance of HVPS+ and CBPR+. The latter will have the onerous task of encouraging mutual exchange on the impact of future developments and updating usage guidelines. Arbitration will be conducted in the event of disagreement between the stakeholders. So that's good news! Maximum harmonisation should continue after 2025, with the gradual integration of new market infrastructures that agree to get on board with ISO. 

By the way, where are we now with this migration of payment messages to ISO 20022?

At the end of October 2023, adoption of the new standard was still limited. The interbank cooperative Swift estimated that only a fifth of cross-border payments had migrated to the ISO 20022 format. This is not a surprise in itself, as it is the market infrastructures that will drive adoption, migrating over time. They have until November 2025 to do so, and some of them, for major global exchange currencies, are preparing to take the plunge: CHIPS and CHATS in 2024, and Fedwire, which has planned to migrate in March 2025. By this date, experts at the interbank cooperative Swift estimate that between 80% and 90% of correspondent banking payments, both in volume and capital terms, will be exchanged in ISO 20022 format. 

“Rome was not built in a day. Infrastructure projects of such global importance cannot be completed in a matter of weeks or months.” Frantz Teissèdre, Head of Public Affairs, Cash Clearing Services

It is therefore essential that all players remain focused on meeting the November 2025 deadline for completing the migration of payment and reporting messages to ISO 20022 so that all stakeholders can make the most out of it. The G20 payment authorities have defined a very ambitious roadmap for the end of 2027 in terms of speed, lower costs, greater transparency and accessibility of international payments.
The rich and structured data of ISO 20022 will be a fundamental building block for the payments industry to achieve these objectives. 

¹Relationship Management Application (RMA) authorisations allow financial institutions that exchange data to control their exchanges. They allow Swift users to ensure that the message they are about to send will be accepted by their correspondent.

²Swift, together with the world’s leading banks and market infrastructures, formed the HVPS+ Market Practice Task Force. While ISO 20022 standards are constantly evolving, good stability practices for high-value payments have been published, and the industry now has a roadmap for harmonisation. High Value Payments Plus (HVPS+) – the next stage step towards ISO 20022 Harmonisation | Swift

³Cross-border payments and reporting plus (CBPR+) is a work group of payments experts whose mission is to create global guidelines on business practices and the implementation of ISO 20022 to ensure harmonised deployment and implementation by banks.