ISO 20022, introduced by International Organization for Standardization, is an open global standard for exchanging electronic messages between financial institutions.
The standard was introduced in 2005 to give financial institutions a standard format for developing messages in one eXtensible Markup Language (XML) rule.
The ISO 20022 standard covers financial data between financial organizations, including payment transactions, credit and debit transactions, security trading, and other financial information.
Although the standard has been here for almost 20 years, the interest in ISO 20022 has increased recently.
Since there are various messaging standards and formats for different geographical areas, it is now more than essential to use a common standard to synchronize the language across multiple domains.
SWIFT (Society for Worldwide Interbank Financial Telecommunications) has fully committed to adopting ISO 20022 for some messages by November 2025 and is urging all financial institutions to adopt the standard for all cross-border payments.
According to SWIFT, "Cross-border payments and reporting MT messages will be decommissioned at the end of the coexistence period with a full move to ISO 20022 for CBPR."
Some estimates predict that 80% of global, high-value payments will be processed through ISO 20022.
If the standard is embraced worldwide, it could transform cross-border transactions drastically, which have always encountered security and quality data issues due to overreliance on legacy technology.
Defining a global messaging standard in an ideal world should enable financial institutions to attain system interoperability across all parties and improve the overall value of the data consumer applications.
However, creating a strict global standard will also have its downsides.
All the parties involved should formally agree and comply with political and complex technology constraints, meaning that the counterparties will probably need to sacrifice their time and competitive advantages.
Moreover, it could slow down innovation in the industry, hindering possibilities for new solutions for end corporate users.
SWIFT is still the most widely used bank channel for cross-border payments. Most countries are working towards adopting ISO 20022 standard; the US and UK are expected to adopt the standard by 2023.
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