ISO20022 Migration is the process of transitioning from the current SWIFT MT messages, which are based on the ISO 15022 standard, to the new ISO 20022 messages, which use a common XML-based syntax and a shared data dictionary. The migration will take place over a period of several years, starting from March 2023 and ending in November 2025, according to the SWIFT network’s timeline. During this period, there will be a coexistence phase, where both MT and ISO 20022 messages will be supported, followed by a full migration phase, where only ISO 20022 messages will be accepted.
Why is ISO20022 Migration important?
ISO20022 Migration is important because it will bring many benefits to the payments industry and its participants, such as:
- Enhanced data quality and transparency: ISO 20022 messages can carry more information and details about the payment transactions, such as the purpose, the parties involved, the legal entity identifiers, the remittance information, and the regulatory reporting requirements. This will improve the data quality and accuracy, reduce the need for manual intervention and reconciliation, and enable better compliance and risk management.
- Increased efficiency and interoperability: ISO 20022 messages are designed to be compatible and harmonized with other payment systems and market infrastructures, such as SEPA, TARGET2, Fedwire, and CHIPS. This will facilitate the integration and communication between different platforms and regions, and enable faster and smoother cross-border payments.Innovation and value-added services: ISO 20022 messages can support new payment products and services, such as instant payments, request-to-pay, and end-to-end tracking. This will create new opportunities for banks and financial institutions to offer more value-added services to their customers and differentiate themselves from the competition.
How will ISO20022 Migration affect the payments industry and its stakeholders?
ISO20022 Migration will affect the payments industry and its stakeholders in various ways, depending on their roles and responsibilities. Some of the main impacts are:
- Banks and financial institutions: Banks and financial institutions will need to prepare for the migration by upgrading their systems, processes, and skills to handle the new ISO 20022 messages. They will also need to align their strategies and timelines with the SWIFT network and the market infrastructures they connect to. Moreover, they will need to assess the potential benefits and challenges of the migration, and explore how they can leverage the enhanced data and capabilities to create value for their customers and themselves.
- Corporates and customers: Corporates and customers will also need to adapt to the migration by updating their payment formats, instructions, and workflows to comply with the new ISO 20022 messages. They will also need to coordinate with their banks and service providers to ensure a smooth transition and avoid any disruptions or errors. Furthermore, they will need to evaluate the opportunities and implications of the migration, and consider how they can use the enriched data and features to optimize their payment operations and performance.
