With introduction of new standards there can often be a tendency to implement in a last-minute rush close to the mandatory requirement date. However, when a standard such as the ISO 20022 raises the potential for payments and bank statements to fail, it is vital that this change receives the necessary focus as early as possible.

The new standard will require significant planning, system configuration and testing to avoid the risk of payment or statement integration failure. For any Treasurer, CFO and/or CIO, this should be high on your priority list to address in 2024.

Background: In the 1970’s when system storage and bandwidth was expensive, payment messages were small and contained minimum data for data processing. However, the world has evolved with much faster internet connectivity and increased need for more data. Electronic message standards introduced in the 1970’s no longer provide businesses with sufficient data to support automation, eliminate manual intervention to interpret data, and to provide greater insights.

To address these challenges, G20 is promoting the harmonised use of ISO 20022 for enhancing cross-border payments. This standard utilizes an XML file format for financial messaging, allowing for a more comprehensive exchange of information in payment transactions, securities trading, and other financial activities. ISO 20022 is poised to become the cornerstone of modern finance.

Why there is a need for transition to ISO 20022?

Moving to ISO 20022 is a significant step in standardising financial messages. Until recently, the MT message standard prevailed globally to facilitate various financial activities such as funds transfers, cross-border payments, clearing and settlement, and securities transactions. However, this standard is not highly rules based and prescriptive, in contrast with ISO 20022, leaving significant ambiguity regarding the data being exchanged. This ambiguity results in inefficiencies, obstacles to automation, and difficulties in achieving global interconnectivity. Additionally, MT messages restrict the quality of data businesses currently exchange given some important data fields are limited in size, unstructured, or optional to use. 

Regulators across the globe now demand greater transparency regarding payment participants and purposes. A clear, unambiguous, rules-based standard is required for these demands to be consistently met. For example, use of the current MT format would risk institutions squeezing anti-money laundering (AML) information into limited or unavailable fields. For instance, an unstructured element “CA” in the party field could mean either Canada’s country code, or California. 

What changes corporate can expect due to ISO 20022 implementation?

The global standard will introduce several new data requirements and will impact payments submitted to the bank.

Any source system creating payments, (i.e., payroll/employee expenses, supplier invoices, tax related payments, etc.) will need to capture additional data requirements. Any system used to release the payment file and/or receive bank statements will require system configuration changes to accept the new format. Corporates can expect two key changes due to ISO 20022:

New data requirements: The global standard will introduce several new data requirements that will impact payments. Examples include:



Purpose of Payment Codes (PoPs)


With over 1,600 PoPs, a PoP will be required for payments, as an example, in the UK there will be 6 specific PoPs related to a property transaction.

Legal Entity Identifiers (LEIs)


For organisations regulated by the PRA in the UK, it will be a mandatory requirement for a payment to include the LEI.

Structured Remittance Data


It will be required to provided structured data within payments. The use of fully unstructured addresses will result in a rejection.


Message format: The well-known financial messaging formats will migrate away from MT. Below is an extract of some of the changes:


Message name

ISO equivalent


Request to Transfer



Customer credit transfer (single)



Customer Statement Message



Intra-day statement



These are significant changes and the SWIFT network plans to end coexistence of MT and MX by decommissioning MT messages by November 2025.

When is this being introduced (key milestones)?

Below summarises the key milestones for UK CHAPS payments. However each country, payment type and bank will have their own timelines, with many converting well in advance of these deadlines.

May 2025


Nov 2025


Nov 2026


Nov 2027

Mandate the use of Purpose of Payment Codes for Property transactions, and LEIs.


Hybrid or fully structured address data mandated i.e. Town Name and Country code.


Unstructured Addresses will be rejected.

End of transition of MT to MX messages.


Mandatory use of purpose of payment codes for all payments.

What challenges might corporations encounter if they are not adequately prepared to address this regulatory change?

Despite the benefits that ISO 20022 has to offer, this standard has significant ramifications to processes pre and post payment (i.e., Accounts Payable/Receivable, Payroll, bank reconciliations, Treasury, etc.). These changes are likely to require significant effort to obtain/update data in the relevant systems, i.e., ERP, payroll, expenses, treasury systems.

Significant end to end testing will be needed to minimise disruption to ‘business as usual’ and prevent any implications on tasks further downstream. Challenges that a Corporate may face include:



Discovery and identification

Engaging with your banks to identify their timelines/deadlines and expected impact across the organisation.

Data Quality

Assessing data quality to identify accuracy and completeness of this data. This can pose a challenge, with potential data quality issues resulting in processing errors and reconciliation complications.

Messaging formats

Identify the number of different formats which are required to be adopted to meet the new global payment messaging standard.

Vendor engagement

Engage with system vendors on readiness/effort to reflect the new standards within all relevant systems.

If not adequately prepared, a Corporate could be dependent on banks to convert messages from/into the existing MT format. This doesn’t come without risks, as banks may not offer this service and if they do then bank transaction details are likely to be truncated, potentially causing errors and delays in payment process and downstream processes such as bank reconciliations. 

How can KPMG help?

As a multi-disciplinary firm, we understand the challenges that businesses face in adapting to ISO 20022 and navigating the transition period. We can support you to:

  • Develop strategies and assess options to transition from existing to the new standard whilst minimising payment and operational disruption.
  • Diagnostic assessment to identify the different data gaps in the various source systems to become compliant with the new messaging standard.
  • Support with assessment of in-house build vs SaaS based payment hub technology to meet new payment/bank statement formats.
  • Support with selection of payment hub technology to manage the change in payment/bank statement formats.
  • Design and implementation of payment hub technology to help you through the ISO standard changes.