Acting on feedback from the financial services community, SWIFT has announced it will enable ISO 20022 messages for cross-border payments and cash reporting businesses starting from the end of 2022. The original deadline announced for migration was November 2021. SWIFT says that the pushback is so that banks can adopt at their own pace, and reduce the total industry costs of realising the benefits of ISO 2022 together with the new platform.

The industry cooperative says that work already undertaken by the community for ISO 20022, including data remediation, channel improvements and back-office processing is not wasted and will play a critical role in enabling future innovation by banks. The end-date to enable full ISO 20022 for cross-border payments remains as originally planned, November 2025. The coexistence period for current SWIFT MT messages and a new API-based exchange will last until that date.

This means that financial institutions can maintain existing standards or migrate, and plan change at their own pace in line with their own innovation priorities.

Highlights of SWIFT’s new approach include:

• The new approach impacts SWIFT cross-border payments and cash management messages only. SWIFT support for market infrastructure (MI) ISO 20022 migration initiatives, including TARGET2 and Eurosystem Market Infrastructure Gateway (ESMIG), Bank of England (new RTGS) and other MIs is not affected.
• New SWIFT capabilities will maintain complete data and state information for transactions centrally, relieving institutions in a payment processing chain of the obligation to pass on complete data and eliminating the problem that intermediaries may ‘break the chain’.
• Improved transaction data quality through the use of ISO 20022 definitions and structures remains a key community objective and a cornerstone of the new approach.
• Centralised orchestration, translation and protocol mediation services will enable institutions to continue with the formats and protocols they use today, and to implement ISO 20022 at their own pace without impacting the rest of the community;
• To avoid community investment in a short-lived, messaging-only ISO 20022 solution, use of the existing SWIFT MT standard for cross-border and cash reporting will be extended by one year. Use of ISO 20022 for cross-border payments and cash reporting will be phased in under the new approach from the end of 2022.
• From the end of 2022, the MT standard will be supported for backward compatibility purposes only. New developments will be based on ISO 20022 data, and will require institutions to implement structured data capabilities.
• As originally planned MT category 1, 2 and 9 messages used in cross-border and cash reporting payments will be decommissioned in November 2025.

SWIFT issued the following guidelines to financial institutions as a result of the deadline change:

• Banks’ plans to adopt ISO 20022 for MI initiatives, including TARGET2 migration/ESMIG, are not affected.
• The work already undertaken by the community to-date for ISO 20022, such as data remediation, channel improvements and back-office processing is not wasted and will still be required under the new strategy.
• ISO 20022 messaging capabilities using the new FINplus messaging service will not be required for cross-border payments and cash reporting in November 2021.
• Banks will continue to send and receive MT categories 1, 2 and 9 for cross-border payments and cash reporting after November 2021.
• Payments originating in ISO 20022-native PMIs such as Target 2 and EURO1 (after November 2021) may include data that does not fit in the MT format. To mitigate compliance risks when such payments include a subsequent cross-border ‘leg out’, senders should ensure that the cross-border MT includes the key party information from the original ISO 20022 message. SWIFT will publish formal market practice to guide implementers. 
• From the end of 2022, banks will have the option to send and receive MT or ISO 20022. ISO 20022 users will also have the choice of the InterAct FINplus messaging service or APIs.
• Institutions that originate high volumes of payment transactions will be encouraged to be early adopters of ISO 20022 for payment initiation, to ensure quality data is captured at the start of the transaction.
• Ongoing work on channels and applications to enable ISO 20022 data to be captured, stored and shared should continue.