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Barclays- Getting ready for ISO 20022 | Key things to consider

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Getting ready for ISO20022

The adoption of the messaging standard ISO20022 is at the core of a major transformation across the payments industry, involving market infrastructures, local payments schemes, financial institutions and payments service providers who have drawn up plans to adopt and migrate to a common standard over the next five years.

Whilst ISO20022 is already used by certain services between corporates and banks, payments between financial institutions continue to operate on legacy message protocols including the widely used SWIFT MT messages or scheme specific proprietary messages.

What is ISO20022?

ISO20022 allows for richer, more structured data content than the legacy messaging standards it will replace and will bring consistency to the financial messages passed between participants.

Payments schemes such as CHAPS in the UK and TARGET 2, Euro 1 & Step 1 in Europe are expected to have fully migrated to ISO20022 by Q2 2023, with all major payments infrastructures expected to have migrated by November 2025.

Note: migration plans for major payments infrastructures can be found on their websites, please refer to the useful resources section at the end of this article.

Benefits of ISO20022

Adoption of a single standard across payment systems will benefit both the banking industry and the end users by providing the following enhancements:

  • Data quality: The ISO20022 standard enables enriched data via enhanced Creditor and Debtor details, which are structured in a consistent format. It also allows for longer Payment References to be included within payments.
  • Operational efficiencies: Through the use of more structured, enriched data, there will be opportunities to improve and automate the reconciliation of transactions and accounts. Fewer payments are expected to fail due to incomplete or incorrect information.
  • Improved AML and fraud protection: Richer data will help support improved compliance practices by the regulators, banks and end users to prevent fraud and target financial crime.
  • Increased innovation: Adoption of the ISO20022 messaging standard will allow for greater flexibility than the standards it replaces, this will provide more opportunities for innovation, better product development and faster responses to changes within the industry.
  • Build once, use many times: The common data standard ensures that firms that operate in the key markets of the world can access their banking services more efficiently by building to the standard once and deploying across geographies.

Key things to consider

Businesses who prepare early for ISO20022 adoption will not only minimise any potential disruption, but will also likely be in the best position to start leveraging the potential opportunities.

Whilst the first phase of the migration to the new standard is not expected to have direct impact until November 2022, you may want to consider:

Impact of ISO 20022 adoption:

  • You may want to review your internal systems and the way you currently manage data to ensure it is structured correctly so that you can continue to make payments and process the information received from your bank. For example, will your systems be able to support full Creditor/Debtor information when this becomes mandatory?
  • Engage early with your providers of treasury and payments systems to understand how they can support you.

How are your suppliers adapting to the change?

  • You may need to understand if they plan any changes to the information they will provide in their invoices, what information they require to be sent with the payment and how this impacts your back office processes.

Will these changes impact your own customers and the services you provide?

  • Assess what information you will require from them in the future and equally consider what information your customers will require from yourselves, for example in the invoices you will issue for services
  • ISO20022 may create added value for your clients. You may want to take time to explore how your team will take advantage of this opportunity, and how you will communicate this to clients.

What benefits might your organisation gain as a result of these changes?

  • The richer, structured data may provide enhanced analytical opportunities that could lead to a better understanding of customer behaviour or pain points to be resolved
  • Efficiency gains from streamlined processes or from strategic choices you may have to make around managing and organising your data
  • You should also consider possible fraud prevention opportunities as a result of the enhanced data available to you.

Are your staff ready for ISO 20022? 

  • Finally, you may need to consider the levels of expertise across your organisation and identify training requirements for individuals impacted by the changes introduced as a result of the adoption of ISO20022.

How we support customers

As a global provider of payments services, we actively participate in industry forums on the adoption of ISO20022 and are working with regulators and peers on the implementation of this new messaging standard.

We have engaged in a global programme that spans multiple businesses and geographies. Our objective is to support you during this process to minimise the impact on your business by ensuring a seamless adoption of the new standard for payments. Accordingly, we will aim to communicate in a timely manner all relevant changes, appropriate for the services you use.

ISO20022 – site dedicated to the ISO20022 standard.

SWIFT ISO20022 – section of the SWIFT website dedicated to the adoption of ISO20022. Included details of their ISO20022 Programme.

Bank of England ISO20022– section of the Bank of England website dedicated to the adoption of ISO20022.

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