ISO 20022 Overview

Over the next several years, leading payment and messaging market infrastructures will pursue significant platform modernization strategies to help financial institutions provide better digital solutions, increase automation & efficiencies, refine compliance capabilities and deliver end-to-end execution cycles closer to real-time. To support these goals, many are migrating payments and cash management related messaging to the ISO 20022 standard for high-value and cross border payments.

While rollout of this new standard may not have captured the level of attention that other innovative digital and technology-related topics have generated, the transition nonetheless promises to have significant impacts on all financial institutions over the coming years—impacts that they need to understand and begin to prepare for, starting now. 

Few payment channels will be untouched as ISO 20022 adoption spreads, bringing with it richer information than SWIFT MT messages or any of the other legacy formats that are used today.  The transition is, in fact, already in progress and will continue over the next several years:

• ISO 20022 is used for several of the new instant payments systems such as the Real-Time Payments payment platform of The Clearing House in the US.

• The EUR payment infrastructures and SWIFT will begin their transition in March 2023.

• CHAPS will then migrate to ISO 20022 on June 19, 2023.

• Additional major payment market infrastructures such as CHIPS and Fedwire, will implement enriched ISO 20022 in November 2023 (CHIPS) and on March 10, 2025 (Fedwire).

It’s important to understand that the transition to ISO 20022 won’t happen automatically and will require a considerable investment of time and resources to come to fruition. Financial institutions need to take prompt and decisive action to move toward adoption of the new standard—or risk having to rapidly catch up with the industry when the standard becomes pervasive. Among the actions to be taken, they will need to create a timeline that allows them to:

• master and apply the new payments messaging standards.

• understand how the change will impact future business strategies.  

• redesign and implement infrastructure changes needed to support adoption.

As the ISO 20022 standard gains traction across payment and messaging market infrastructures, financial institutions must prepare to adopt the new standard to access the improvements it will bring.  

BNY Mellon can help.  We understand the mechanics of ISO 20022 as well as its strategic implications and stand ready to help clients navigate their unique journeys in cross border payments transformation.