Countdown to the ISO 20022 US Deadline

The second half of 2024 is a crucial time for US banks and financial institutions to be completing plans to meet the March 2025 ISO 20022 changeover deadline. Q3 2024 closes in weeks, and the deadline – now just months away – is approaching fast. 

There is also the end of the Swift global co-existence period looming in November 2025. As of August 2024, only 26% of Swift cross-border traffic is “ISO Native,” which is the final stage of readiness with the protocol. US FIs who underestimate the importance of leaving time for testing and roll-out across the whole ecosystem will fair badly.  

Other parts of the world are already using the new standard, often called a “common language” for digital messaging and payments in connected global financial systems. The Federal Reserve adopted it in 2022 and set original implementation deadlines. 

However, migrations have a reputation for delays. Finextra reported two delays in 2023, adding to seven rollbacks in 2022, one in 2021, and three in 2020. Many of those were network hurdles to becoming a functional global standard. That’s no mean feat. 

March 10, 2025, is the date that ISO 20022 becomes the universal digital language for US financial services. Ironically, it’s the one original target date that hasn’t changed. 

US banks and corporates are urged to be ready. Many will be. Many won’t. The time for panic will be when deadline extensions end, but laggards are still getting it together. 

The current Swift MT messaging standard (itself a holdover from an earlier standards change) will be supported for up to “several years” after the March deadline, according to the US Federal Reserve’s Fedwire® Funds Service. 

There’s also the ChIPS ® network, “the largest private-sector high-value clearing and settlement system in the world” operated by The Clearing House, which said it “successfully migrated to the ISO 20022 message format on the April 8 banking day.” 

It’s not a matter of if, but when, for all relevant players. At times like this, it’s good to recall why massive change is happening and more to the point, what’s in it for you? 

Getting ISO-lated 

The new standard delivers far greater granularity, security, and functionality. “ISO 20022 is an open global standard for financial information. It provides consistent, rich, and structured data that can be used for every kind of financial business transaction,” per the Swift website.  

Swift is a key driver for ISO 20022 and is actively cracking the whip to ensure compliance. Any of the 11K+ Swift members that miss the November 2025 deadline for co-existence will be subject to added fees, hassles, and damage to customer experience. Although corporates are not currently included in the Swift mandate, it should be viewed as a missed opportunity to leverage the clear benefits of richer data, improved transparency, and operational efficiency as soon as possible.  

Much revolves around getting implementation right, with solid planning and execution.  

J.P. Morgan predicted that “By 2025, ISO 20022 will be the common language of the global financial industry. We recommend onboarding the standard sooner to take advantage of benefits, structured data to understand your payments and your clients, and to have sufficient time to plan, test and launch ... ISO 20022 processes...” 

This is no surprise when considering the Swift mandate for November 2025.  

The multi-phase process moves from the basic “ISO connected” level to a “market-ready” state. Neither of those levels meet the requirement for “ISO Native” from Swift or will afford the full benefits. 

At the ISO Native level, “systems have the right architecture, the right enhanced and structured data, and the right format. Accessible elements for ISO Native (outside of the obvious data volume and analytics) include real-time payments and real-time settlements, lower costs via straight-through processing, better tracking of transactions, transparency to meet current and new regulations, payments-system stability improvements and better payment processing monitoring,” as Bottomline stated in an earlier article. 

As the Fed’s FBRservices.org site states, “the extent of your preparations will largely depend on”: 

• How much technology you have integrated with the processing of your outgoing and incoming Fedwire Funds Service messages 

• The degree to which you perform your own software development 

• The degree to which you rely on service providers and/or software vendors to provide an interface to the Fedwire Funds Service 

Connecting B2B Payments in New Ways 

Some providers are helping customers through the implementation process via education and technical expertise. And because ISO 20022 represents the next step in payments interoperability globally, B2B payments will be a prime beneficiary. 

During a recent Bottomline webinar, Frédéric Viard, Head of Commercial Product Management Financial Messaging at Bottomline, boiled down the benefits of ISO 20022, saying, “There are two main areas. One key aspect is interoperability...because this is becoming the common language globally. This will facilitate interoperability.” 

The second area, Viard said, is the richer data format and better structure afforded by ISO 20022 to enable end-to-end processing and fewer exceptions, making everything from analytics to transparency to important legal tasks like sanctions monitoring work smoothly and remain in compliance. 

Another guest on that panel, Mike Chambers, a payments industry veteran and today the publisher of influential newsletter Payments:Unpacked, noted that the new data standard brings speed, deep transaction details, and improved security. 

Those three attributes are coveted by banks and corporates, perhaps none more than security, given that fraud has been off the charts since the pandemic hit in early 2020.  

“The main benefit [of ISO 20022] remains improving fraud monitoring and management,” Chambers said. “Transparency and cash visibility are indispensable facets of fraud prevention. Leveraging data-rich standards...empowers fraud departments to discern anomalies and detect potential fraud patterns with greater precision.” 

See the ISO 20022 webinar series here.