Beyond Messaging: How ISO 20022 Structured Data Will Reshape Global Payments: By Akhil Rao

Finextra

10-05-2025

The global cross border payments ecosystem is undergoing one of its most significant transformations in decades. With the November 2025 deadline marking the end of the coexistence period for SWIFT MT and ISO 20022 messaging standards, financial institutions are accelerating efforts to align with the CBPR+ roadmap. However, this transition is more than a compliance deadline—it is a structural shift towards enriched data, end-to-end interoperability, and future-proof infrastructure that enables new digital asset use cases.
At the centre of this transition is ISO 20022—a global standard for financial messaging that promises richer semantics, consistent structure, and machine-readable data across payment systems, securities, trade finance, and FX.
The State of ISO 20022 Adoption
As of Q2 2025, the global adoption of ISO 20022 for cross-border payments continues to gain traction:
• Over 6,000 institutions are ready to receive ISO 20022 messages via SWIFT, with 1,900+ banks sending daily.
• 35% of SWIFT FINplus traffic is now in ISO 20022 format, a major jump from under 10% at the start of 2024.
• However, nearly two-thirds of institutions remain reliant on legacy MT formats, underscoring the dual challenge of technical migration and data readiness.
Despite impressive progress, SWIFT's own updates suggest that large banks, especially in correspondent banking corridors, are still facing issues such as data truncation, hybrid address formats, and inconsistent implementation of mandatory fields. These problems point not to lack of intent, but to structural gaps in legacy middleware, compliance workflows, and upstream data providers.
Structured Data: The Foundation for Smarter Payments
ISO 20022 introduces a paradigm shift—from free-text fields to machine-readable, structured data. This is especially relevant for regulatory compliance, fraud prevention, and automation.
Key benefits of structured data in ISO 20022:
• Transparency and Traceability: Clean identifiers (LEIs, BICs), address structures, and purpose codes enable regulators and counterparties to better trace fund flows.
• Improved Compliance Outcomes: Structured remittance and regulatory reporting (via elements like RgltryRptg and Purp) simplify AML/KYC screening, especially in high-risk corridors.
• Operational Efficiency: Payment repair, reconciliation, and exception handling can be largely automated with tools that parse and interpret structured fields.
• Better Risk Assessment: Financial institutions can build more robust fraud models when working with consistently labelled data across transactions.
This transition is not simply about richer data—it is about interoperability, where structured messages can flow seamlessly across RTGS systems, fintech APIs, and even digital asset ledgers.
Understanding Structured Data in ISO 20022
Structured data refers to information captured in clearly defined fields using standardized formats. In ISO 20022 messages, this includes:
• Structured Postal Addresses
• Legal Entity Identifiers (LEIs) for parties involved in transactions
• Purpose Codes to specify the reason for the payment
• Structured Remittance Information (SRI) to facilitate automated reconciliation
Structured data is essential for reducing ambiguity, enabling automation, and supporting advanced compliance and analytics workflows.
Why Structured Data Matters
Structured data enables institutions to fully realize the benefits of ISO 20022:
• Regulatory Compliance: Supports FATF Travel Rule, AML, and KYC mandates
• Operational Efficiency: Improves straight-through processing and reduces repair rates
• Cross-Border Interoperability: Ensures clarity and consistency across jurisdictions
• Analytics and Innovation: Feeds clean, structured inputs to AI and analytics tools
Without structured data, ISO 20022 becomes little more than a messaging upgrade.
Global State of Structured Data Adoption
SWIFT: Hybrid Address Migration and Structured Data Mandates
SWIFT has set a clear roadmap for structured data adoption under its CBPR+ program:
November 2025: Introduction of hybrid address format for CBPR+ and HVPS+
November 2026: Mandatory use of structured or hybrid addresses; unstructured formats no longer allowed
Hybrid addresses require a minimum of structured town name and country, with a maximum of two unstructured address lines. Financial institutions must collect, validate, and structure address data accordingly and update internal systems to comply.
United Kingdom: Bank of England's Initiatives
The Bank of England is a global frontrunner in enforcing structured data usage in CHAPS:
May 2025: Purpose Codes and LEIs mandatory for financial institution payments and property transactions
November 2025: Hybrid address format introduced (structured town and country required)
November 2026: Fully structured addresses become mandatory
November 2027: Structured remittance information becomes mandatory
These mandates reflect a strategic commitment to structured data and downstream automation.
European Union: European Central Bank (ECB) Initiatives
March 2023: ECB launched its new T2 RTGS platform, replacing TARGET2 and enabling ISO 20022
T2-T2S Consolidation: Full integration with T2S enhances liquidity and data visibility
Full Migration Strategy: ECB chose a "fully-fledged" migration approach, encouraging use of structured fields rather than a like-for-like mapping
This strategic stance enables maximum use of ISO 20022's rich data elements from the outset.
United States: Federal Reserve and CHIPS Initiatives
April 2024: The Clearing House completed CHIPS migration to ISO 20022
July 14, 2025: Fedwire Funds Service to adopt ISO 20022 on a single-day cutover
Testing & Readiness: The Federal Reserve has urged institutions to complete testing by July 2025 to ensure continuity and compliance
The aligned transition between CHIPS and Fedwire will ensure U.S. infrastructure supports richer data for high-value payments.
BIS: Aligning ISO 20022 to Global Public Policy Goals
The Bank for International Settlements (BIS) has been a strong advocate for ISO 20022 as a foundational enabler of efficient, inclusive cross-border payments. Its Committee on Payments and Market Infrastructures (CPMI) has repeatedly highlighted structured data as a priority action item in the G20 roadmap for enhancing cross-border payments.
In its 2023 and 2024 publications, the BIS made several key points:
• Standardisation of payment message fields, especially originator and beneficiary data, is essential for faster compliance checks and fraud prevention.
• Harmonised ISO 20022 usage guidelines are needed across jurisdictions to reduce fragmentation. The CPMI working group defined 12 harmonised data fields, such as BICs, IBANs, and address elements, which all payment systems should support consistently.
• ISO 20022 is seen as critical infrastructure, not only for banks but for CBDCs, digital asset networks, and alternative payment models.
In January 2025, the BIS announced the formation of a Market Practice Panel consisting of regulators, SWIFT, PMPG, and private sector participants to maintain and enforce global alignment on ISO 20022 message implementation.
Beyond Banks: ISO 20022 in the Age of Digital Assets
A particularly forward-looking aspect of ISO 20022 lies in its potential application to stablecoins, tokenised deposits, and CBDCs. While originally designed for traditional payment rails, ISO 20022 is increasingly being viewed as a bridge between traditional financial infrastructure and decentralised finance (DeFi) or tokenised platforms.
The BIS Innovation Hub's Project Mariana (2023–24) explored how ISO 20022 messages could enable interoperable CBDC clearing across multiple central banks, with harmonised data elements supporting smart contract triggers.
In another BIS report on the use of stablecoins in retail and cross-border contexts, ISO 20022 was highlighted as a natural messaging standard for syncing value transfer with asset delivery—particularly in PvP (Payment vs Payment) and DvP (Delivery vs Payment) arrangements.
Some of the implications for financial institutions include:
• Crypto compliance integration: Structured messages can carry transaction identifiers or blockchain hashes, aligning with Travel Rule expectations.
• Tokenised payments and smart contracts: Purpose and remittance fields can trigger specific actions in programmable money environments.
• ISO-compliant stablecoins: An emerging class of digital currencies branded as 'ISO 20022-ready' is gaining attention—though often incorrectly so. True ISO 20022 compliance requires adherence not just in format, but in message schema, governance, and interoperability.
The Road to November 2025 (and beyond)
With the MT/ISO coexistence period ending in November 2025, financial institutions need to prioritise the following over the next 6 months:
• Internal ISO 20022 Maturity Assessments: Identify where structured data is missing or weak—especially in upstream systems and correspondent flows.
• Data Governance Enhancements: Implement data dictionaries, field-level validations, and consistency checks to reduce ambiguity.
• Testing and Simulation: Leverage sandboxes to test real-world scenarios, especially for high-value and cross-border messages (pacs.008, pacs.009, camt.052–054).
• AI and ML Enablement: Use AI to detect malformed messages, enrich hybrid addresses, and reduce operational friction.
• Regulatory Alignment: Stay updated with evolving mandates from the ECB, BoE, Fed, MAS, and FSB, especially around structured addresses, LEIs, and travel rule elements.
Looking Ahead: The Role of AI, APIs, and Regulatory Reporting
As ISO 20022 adoption deepens, we will see convergence between messaging standards, APIs, and real-time analytics:
• Regulatory Reporting: ISO 20022-native formats will become foundational for automated reporting (e.g., PSD3, MAS 610, UK's Transforming Data Collection agenda).
• Fraud Detection: Structured fields allow for network-level monitoring and AI-driven anomaly detection.
• API-Payments Interoperability: Open finance APIs will increasingly use ISO 20022 schemas as payload formats, aligning faster payments with regulatory data requirements.
In the long term, ISO 20022 is more than a compliance initiative. It is the bedrock of data-rich financial infrastructure, powering not only global payments but also tokenised money, AI-first compliance, and real-time public-private collaboration.
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References & Further Reading