Trust at the till: AI compliance for retailers and their customers
November 6, 2026
The migration to ISO 20022 has exposed a divide between financial institutions that treated the transition as a compliance exercise and those that used it to rethink their payments infrastructure. With attention shifting to what comes next, a more incremental approach to modernisation could help banks unlock the benefits of richer payment data while preparing for an increasingly complex payments landscape.
The financial services industry has spent years preparing for ISO 20022. Yet the industry’s transition to ISO 20022 has left institutions in markedly different positions. Some have modernised their infrastructure to make use of richer payment data, while others have achieved compliance without fundamentally changing their underlying systems.
Both groups can exchange compliant messages. The difference lies in what happens to the data once those messages enter their systems.
For institutions that focused on meeting the minimum requirements, the challenge now is to realise the benefits of ISO 20022 without embarking on another costly transformation programme.
The challenges facing financial institutions are examined in Financial Messaging at a Tipping Point: Why Modernization Can’t Wait, an eBook developed by Finastra in partnership with Datos Insights. The research explores the pressures driving financial messaging modernisation and the opportunities for institutions to make better use of richer payment data.
“One of the things we really found was the fact that there were two types of organisations: those looking at it from a compliance project perspective, and others who looked at this as a strategic initiative,” says Laura Bedborough, director of sales and account management for Ireland, the Nordics and the Americas at Finastra.
Some institutions chose to adopt ISO 20022 natively across the systems involved in processing payments. Others relied on translation services to maintain compatibility with existing infrastructure.
The latter approach ensured continuity, but it did not necessarily let institutions fully use the standard’s capabilities.
Much of the value of ISO 20022 comes from the additional information that can accompany a payment. Its structured data provides greater detail about transactions, creating opportunities to improve processes that have historically relied on incomplete information or manual intervention.
Richer transaction data can strengthen fraud detection by helping institutions identify suspicious activity, while also simplifying reconciliation and reducing the need for manual investigation.
These are not automatic benefits of compliance, however. They depend on whether the underlying systems can retain, process and use the information carried in ISO 20022 messages.
The people that treated it as a compliance exercise are now in catch-up mode to make sure that they’re using ISO natively
“The people who treated it as a compliance exercise are now in catch-up mode to make sure that they’re using ISO natively, so that they can actually gain from the rich data structures of ISO,” Bedborough explains.
There is also a growing financial incentive to reconsider reliance on translation services. Swift, for instance, has been increasing charges associated with its in- translation offering, encouraging institutions to move towards native adoption.
That does not mean every institution can make the transition at the same pace.
Smaller banks, particularly those operating in markets where technology investment is constrained, may have little choice but to take a gradual approach. For them, achieving compliance first and improving their infrastructure in stages can be more realistic than attempting to replace multiple systems simultaneously.
The question is how to make those improvements without creating further complexity.
Replacing established banking infrastructure can be expensive and difficult, particularly for institutions whose payment systems have evolved over decades. An incremental approach allows them to address specific weaknesses and introduce new capabilities while retaining systems that continue to perform adequately.
Bedborough contends that the financial messaging layer is a sensible place to begin. While payments pass through several systems between initiation and settlement, the messaging platform provides the connection between an institution’s internal infrastructure and the external networks through which payment instructions are exchanged.
“If you’re connecting and that part has got rich ISO messaging, then that’s a great place to start,” she says.
Improving this layer can help institutions take advantage of richer data while providing a basis for subsequent changes elsewhere in the payment process.
The payments industry is no longer organised around a relatively small number of established networks. Domestic real-time payment systems, alternative cross-border services and new methods of transferring value are giving financial institutions more choices about how transactions reach their destinations.
For banks and payment service providers, greater choice also creates a connectivity challenge.
Supporting an additional payment rail can involve new technical requirements, operating arrangements and controls. If each connection requires a substantial infrastructure project, expanding payment services can become an expensive and time-consuming exercise.
This is where native ISO 20022 capabilities and API-based connectivity can make a difference.
Because the standard is used across multiple payment infrastructures, institutions can establish a more consistent foundation for exchanging information, even where individual networks have different requirements.
One of the benefits of being ISO native is the fact that you can interoperate between rails
“One of the benefits of being ISO native is the fact that you can interoperate between rails,” Bedborough says. “If you start with the financial messaging platform and make sure that you’ve got an ISO 20022-enriched platform, you can then interoperate between the different rails with more flexibility.”
The objective is not to eliminate the work involved in connecting to a new network. Rather, it is to avoid having to rebuild the underlying messaging infrastructure whenever an institution wants to introduce another payment route.
Bedborough points to Nordiska and Maldives Premier Bank as examples of institutions selecting Finastra’s API-based financial messaging platform with future connectivity requirements in mind. While Swift connectivity addresses their immediate needs, the platform is intended to support connections to additional market infrastructures and alternative payment rails as their requirements evolve.
In both cases, the decision reflects a desire to accommodate future requirements without repeatedly overhauling the underlying infrastructure.
Access to different payment networks can influence which customers a financial institution serves and what services it can offer them.
Consider a small business making payments to workers in Africa’s gig economy. Its priorities are likely to be straightforward: payments that arrive reliably, at an acceptable cost and within a reasonable timeframe.
The bank or payment service provider supporting those transactions must determine which payment routes can meet those requirements.
Access to alternative networks may allow it to offer services that would otherwise be difficult to provide through its existing arrangements.
Bedborough sees this as an important part of the case for modernisation. More flexible messaging infrastructure can help institutions improve their existing services while potentially reaching new customer segments and developing additional business lines.
There are internal benefits too. Operations teams need payments to move through systems reliably, with sufficient information to investigate exceptions, track transactions and satisfy screening requirements.
Finastra’s approach includes the ability to incorporate services such as fraud prevention, sanctions screening and payment tracking into the wider payment flow.
For financial institutions, these capabilities are part of a broader calculation. Infrastructure investment must increasingly demonstrate value not only through lower operating costs but also through improvements in service quality and the ability to respond to changing customer needs.
Alongside established banking networks, financial institutions are considering how stablecoins and other forms of digital value transfer might fit into their future services.
Which technologies become widely adopted, and how they interact with existing payment systems, remains uncertain. Institutions nevertheless face decisions today about infrastructure that may need to remain in use for many years.
Bedborough believes this uncertainty makes flexibility particularly important.
“Over the next three to five years, as we’ve seen, there’s different ways now of moving value,” she says. “When new rails come out, whether that’s a stablecoin rail or any future rail or way of moving value, it’s not a completely new project.”
Adopting emerging payment networks will still involve regulatory, operational and technical challenges. However, institutions with adaptable messaging infrastructure may be able to address these requirements without undertaking another extensive technology overhaul.
ISO 20022 migration has established an important foundation, but further investment will be needed to realise its full benefits. That does not necessarily mean starting again.
The more useful question is whether the investments institutions make today will leave them better equipped to accommodate the next change, rather than simply satisfy the requirements of the last one.
