Getting ready for ISO 20022

With the deadline of March 20, 2023 for ISO 20022 fast approaching, many African banks will have already prepared and adapted for the change, but some will still be in the process of getting ready. With this in mind, Sue-Ellen Speight, Senior Vice President, StoneX Global Payments, West Coast Division has prepared this article from a banker’s view of ISO 20022 to answer practical questions, cut through the complexity and identify the parts of your business that are most impacted.


By now, most bankers know that ISO 20022 changes the format of SWIFT messages and, as such, has had a significant impact on IT teams. What may be less clear is its wider business impact on processes and teams like compliance and operations. This article will we hope clarify all these issues.

As a specialist provider of SWIFT solutions to over 100 banks, financial institutions and corporates globally, StoneX has developed a list of ‘most asked questions’ from both a business and technology standpoint for you to use as a ‘Checklist’ (for those well ahead in your preparedness) or an ‘Action Plan’ (if you need help prioritising the most critical actions for the upcoming deadline).

Why ISO 20022?

Let’s set the scene by discussing the history of ISO 20022. What problems does this standard solve? Why is now the right time to make the switch? What important dates should you mark in your calendar?

As global banking and regulation has expanded, there are some practical shortcomings with existing formats:

• Existing formats truncate transaction information and generally provide low-quality data
• 72–94% of data fields are currently unstructured, posing challenges for automated anti-money laundering (AML) screening and straight-through-processing (STP)
• Party fields have vague or missing information and roughly 90% of MT103s have no country data
• In an environment of increased demand for compliance, tracking and transparency, missing data causes banks increased operational and compliance difficulties

What does ISO 20022 deliver?

• ISO 20022 has structured remittance information and dedicated instruction elements
• New elements, e.g., a new initiating party field allows a simpler implementation of Payment on Behalf Of
• New pacs.002 and pacs.004 messages allow for richer status reporting
• Allows for better transparency, status of payment, operational efficiency and compliance accuracy

Why now?

This standard has been around for 15 years so, frankly, it isn’t a new one. What is driving the deadline is a desire to bring US banks in line with the global market and build on the momentum of other initiatives that deliver transparency and traceability such as SWIFT gpi. In the context of heightened global Regulatory and Risk Management demands, ISO 20022 is a key enabler of worldwide payment transparency.

What are the key dates?

From March 20, 2023, it becomes mandatory for banks to accept the ISO 20022 format.

Banks must fully transition to using the format for both incoming and outgoing messages by November 2025. During this ‘co-existence period’ banks are expected to be able to facilitate both formats and have had free access to the SWIFT ‘translator’ tool for up to a year.

There are no other hard deadlines in between these dates, allowing financial institutions to make their own implementation plan.

How are my competitors handling ISO 20022?

We have a deadline; we have fundamental changes to technology; we have financial institutions with vastly different systems, operational processes and vendors; so it’s fair to say that stakeholders from your bank’s business-critical areas will be involved in order to fully implement the standard by 2025. 

It’s not surprising then to discover that each financial institution approaches this in their own unique way. That said, your plan will be shaped by two fundamental questions: Do you outsource to a SWIFT Service Bureau or host your SWIFT systems internally? Will you apply a ‘big bang’ approach, or an ‘incremental’ programme of change?

Utilising a SWIFT service bureau

Your approach will be largely defined by the preparedness of your vendors, and the internal effort required to change systems and processes – including educating customers. 

Experience tells us that, while you can lean heavily on your bureau in terms of the technical aspects of ISO 20022, your internal processes and legacy systems need to be prepared for ISO 20022 also. Sorry folks, even if you use a service bureau, you still have work to do!

Hosting SWIFT systems internally

Internally hosted SWIFT systems need to synthesise the requirements, plan and implement within available, and often constrained IT resources. In many instances, banks opt for a ‘Big Bang’ approach, opting to prioritise ISO 20022 – and if there’s one refrain we’ve heard repeatedly it’s “start early, and yell loudly” for resources. 

Regardless of approach, the most common elements of an ISO 20022 implementation plan will include the following core steps:

Vendor preparedness assessment: If using one, your service bureau should have ISO 20022 well in hand. Providers of core banking technology, on the other hand, may not. Regardless, preparedness constraints allow you to …

Define your approach: Decide your implementation approach as early as possible – will it be ‘Big Bang’ or ‘Incremental Change’? Based on that, now …

Set your ‘stakes in the ground’: Rank the guiding principles you will refer to when you face prioritisation, budget and ‘select-the-best-of-bad-options’ choices. For example: Customer experience must be equal-to or better than it is now; all changes must increase automation and help STP
and keep in mind that speed, cost, and transparency, are also important factors for customers, shareholders and compliance.

Impact assessment: assess which systems, processes, internal functional teams and external stakeholders are impacted by the change.

Create the plan: the implementation plan will of course be shaped by resource availability, deadlines and dependencies but beyond the mechanics, a good programme will be accountable to a Project Steering Group comprised of stakeholders from impacted organisational departments. 

Build a feedback loop: Much time and money is saved by taking input early and often from real users impacted by the ISO 20022 changes. Seemingly inconsequential changes may have larger than expected impacts downstream, flushed out by testing.   

Will the MT format disappear?

An anomaly of the move toward ISO 20022 globally is that, because corporate SWIFT customers are not mandated to move to the ISO 20022 format, banks are obligated to continue sending MT940s and receive MT103s regardless of how fully they have implemented the standard. 

Not prepared?
Here’s what’s to know 

From our global vantage point, working very closely with banks in over 100 countries, we can see that the level of awareness and preparation is varied. Should you find yourself in the ‘less
prepared’ category, we suggest focusing on the following operational ‘realities’ that you might face from March 20, 2023  onward:

Translation: If your core applications are not upgraded to support ISO 20022, translation may be a challenge.

Truncation: post-March 20, 2023, you may face truncation issues which raise two concerns: How will screening of data work, and also,how to ensure you
remain compliant with the travel rule?

Capacity planning: evaluate the likelihood of capacity issues. One study found that a pacs.008 message could be as much as seven times the size of the functionally equivalent MT103 message. This means attention needs to be paid to communication bandwidth, disk space and processing power

Peer wisdom

Especially for African Banker readers, we surveyed clients to capture the most important lessons learned on their ISO 20022 journey:

• Don’t underestimate the cost impact and the importance of continued dialogue between affected stakeholders
• There is so much information on the SWIFT site – research the tools available and be sure to sign up to the SWIFT ‘FINPlus’ service
• Don’t underestimate the importance of testing
• There’s no single ‘right way’ to handle this
• Be aware of the compliance impacts
• Future-proof your implementation – there will be a need to handle multiple standards whenever SWIFT changes or updates the standards

Far from being ‘an IT project’, implementing ISO 20022 can be used as an opportunity to make improvements across your bank that, if undertaken with a sufficiently broad perspective, will deliver internal efficiencies and customer benefits.

African Banker Magazine

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