The adoption of the messaging standard ISO 20022 is at the core of a major transformation across the payments industry, involving Market Infrastructures such as CHAPS, Financial Institutions and Payments Service Providers.
ISO 20022 (sometimes referred to as MX by SWIFT) is a standard that allows for richer, more structured data content than the current legacy messaging standards and will bring consistency to the financial messages passed between participants.
The change to a new format has a number of significant implications for all participants across the industry.
The new format replaces the well-known MT1, 2 and 9 series messages. In simple terms this means that all commercial payments will migrate from MT103 to pacs.008 format, treasury payments will migrate from MT202 to pacs.009, and balance and transaction reporting messages will migrate from MT 9xx to camt messages. In addition, the Exceptions and Investigations processes migrate to MX messages over time.
We will all need to get used to a new language. Instead of an Ordering Party and Ordering Bank, we will need to get used to Debtor and Debtor Agent. There will also be some new concepts that do not existing in MT messages, such as Ultimate Debtor and Creditor fields, as well as the Instructing and Instructed Agent.
For a complete overview of new message types and terminology, please see www.swift.com/standards/iso-20022^. In addition, you can find detailed specifications on www.swift.com/Mystandards^ and online training modules on swiftsmart.swift.com.^
New messages will be transmitted across the SWIFTNet Interact (FIN+) network, rather than the current FIN network. This implies that SWIFT connected banks will require a new SWIFT Gateway and have Relationship Management Application keys (RMA) that are grandfathered from the SWIFT FIN network.
The new SWIFT Transaction Management Platform will provide support for translation, truncation and enrichment, and should help the industry to transition to the new format at different paces.
For more information about the network changes, please see www.swift.com/standards/iso-20022.^
The Market Infrastructures of the top ten currencies around the globe are either already using the new format or are migrating to ISO 20022 in the coming years. The below graphic provides a brief overview of this shift.
Please note: your organisation can use the MX format from November 2022 via SWIFT; however, where it concerns GBP payments, you are requested to refrain from using the MX format in full until April 2023 to avoid truncation issues.
*Please note: timelines are subject to change, as per Bank of England schedules
ISO 20022 also provides flexibility over which data elements are encouraged and, in some cases, which are mandatory. The below table provides a summary of specific data elements and how they should be used when processing GBP and EUR payments.
As we progress through this transition, Barclays will be communicating more detail around which data elements are mandatory via SWIFT MyStandards. We encourage you to consider these developments in your strategy for the coming years.
This new format replaces SWIFT MT. Standardising the format so that it is similar across the globe (e.g. FPS and CHAPS using the same format) helps to drive value for users, with potential for innovation, improved security and speed.
Although the change is driven by Market Infrastructures and SWIFT, there are lots of commercial benefits in using this new format for the industry. Below are topics you may want to consider when determining the value of this change to your organisation and your customers.
Barclays intends to support banks, broker dealers and non-bank PSPs that want to adopt the new format. We recognise that each organisation is different and may need a partner to schedule the change to suit their situation. Please speak with your Relationship Director or Cash Specialist to discuss how we can further support your transition.
Please click below for further reference material.
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SWIFT
Introduction to the new standard, golden source for formatting specifications and online training resources.
Payments Market Practice Group^
The PMPG is an independent SWIFT advisory group, comprised of payments experts from around the globe.
European Central Bank^
This section of the ECB website is dedicated to the adoption of ISO20022.
Bank of England^
This section of the Bank of England website is dedicated to the adoption of ISO20022.
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We discuss how migration to ISO 20022 has a number of significant implications for corporates and their partners across the payments industry.