Migrating from SWIFT MT to ISO 20022

At the request of the financial community, the Swift Board approved plans in September 2018 to transition cross-border payments and cash reporting from the MT standard to ISO 20022. This new messaging format prioritizes data richness over message size and processing costs, leading to faster processing, improved data quality, and enhanced reconciliation. 

ISO 20022 significantly boosts interoperability between financial institutions and payment systems globally by improving transparency and reducing payment processing errors. To ease the transition, both MT and MX formats have been supported since November 2022, but the dual system operation will end in November 2025.  

This article explores the urgency behind this migration and explains how SimCorp is helping clients to migrate seamlessly without disrupting daily operations.

Why you need to act now?

The ISO 20022 messaging format is quickly becoming the global standard, with over 70 countries already using it and 80% of high-value payments expected to be processed using this format by 2025.  

Delaying migration is not an option. Failing to comply could result in penalties, additional charges, and reduced efficiency, leading to more payment errors and poorer customer service. As the financial industry moves towards more sophisticated, structured data standards, keeping up is essential. 

Many of our clients are seizing the opportunity to modernize their entire Swift infrastructure, understanding that this transition is not just about maintaining business continuity, but an opportunity to gain a competitive edge. Acting now allows early adopters to leverage enhanced data capabilities to improve customer service, streamline operations and reduce operational risk. This move will enhance straight-through processing, enabling timely adaptation to the evolving regulatory landscape including T+1—the most recent change in settlement cycle.

How are we supporting our clients?

To ensure our clients are ahead of the deadline, we have set up a global task force and created a general implementation approach for migrating to ISO 20022. A standard implementation is expected to take approximately 15 weeks including go-live and early care support if all preparatory tasks are completed beforehand.

Can’t Swift MT just be upgraded? 

The short answer is, unfortunately, no. Swift MX is a native solution, not just a reformat of the existing MT messages. While it shares the same initial designation and connects to the same counterparties as Swift MT, functionality-wise it’s completely different. The syntax and the semantics of the messages have changed, meaning the message flows are not directly interchangeable.

Currently, the Swift MX solution runs independently of the Swift MT solution in SimCorp platform. This setup allows clients to use both systems in tandem, thereby facilitating a gradual and phased migration from MT to MX for specific portfolios, custodians, transaction types etc. In addition, clients can run transaction flows in parallel for comparative analysis during the transition.

The Cross-Border Payments & Reporting (CBPR+) working group is defining how ISO 20022 should be used on the Swift network and is releasing updates throughout the transition period. SimCorp is monitoring all these changes and adjusting accordingly so that you have a standardized solution that takes advantage of the latest standardized framework. 

Payments are just the first step in the journey to ISO 20022. Once the migration is complete, you can expect new initiatives in other business areas to follow. 

Reach out to your SimCorp representatives to learn more or fill out the form below.