Guide to ISO 20022 migration
As we near the milestone transition dates for cross-border payments and the Eurozone, the ISO 20022 migration is high on the agenda for financial institutions. At its core, it is an exercise in harmonisation, but even harmonisation is susceptible to different approaches – and the risk of data truncation looms as market infrastructures and market participants transition on different timelines.
For instance, the coexistence phase for cross-border payments is rapidly approaching, with SWIFT migrating to the new messaging standard ahead of some of the world’s major market infrastructures. This will create a period where some participants face conversion issues between messages conveyed via legacy systems and those issued via SWIFT using the new data-rich, ISO format.
Announced in 2020, SWIFT’s Transaction Manager was designed to combat the challenges of coexistence, but while it launches in November 2022, it will not go live with full functionality until end of Q1 2023. For a few months, then, issues may persist.
The last push
The journey to ISO 20022 has been long – and not without its challenges. But what matters is not the journey, but the destination. With demand for real-time, digital services increasing, ISO 20022 is a huge opportunity to fundamentally reassess and greatly improve existing business models and solutions. In doing so, it will help the payments community meet the changing needs of end users – both now and in the future. As we approach the final stretch, industry collaboration remains key to success, both initially, and on an ongoing basis.
This is not least because questions remain on several key issues: How will the industry deal with the challenge of data truncation? How will the US cope with divergent migration milestones? Will the Transaction Manager prove to be an effective tool? How can we implement an effective maintenance cycle going forward?
With November 2022 marking the shift from the “before-ISO” to the “after-ISO” era, we see this as a fitting ending for our series. But these lingering questions show that the journey is not yet over. And as we move into this new payments era, we look forward to sharing more insights and opportunities in the future.