Payments in the banking industry

All banks worldwide must comply with the ISO 20022 standard for high-value messaging. This single common global business language for financial messaging is a global mandate for all jurisdictions, including financial institutions in the US. ISO 20022 is a major development in banking, expansive in scope as it impacts the entire payments ecosystem. It serves as the new global business language for payments, utilizing a new XML format. The new ISO 20022 standard also includes 30 percent to 40 percent incremental data that travels with the payment.

Furthermore, many US banks are also adopting Instant Payments, with TCH having already gone live with Real Time Payments (RTP) in 2017 and the Federal Reserve recently launching FedNow in July 2023. The launch of FedNow is intended to bring ubiquity in the market for US Instant Payments.

For US banks, many of them with legacy payment infrastructures, ramping up to meet ISO 20022 mandate and implementing Instant Payments will require modernizing their payment platforms.

A KPMG survey of 200 US bank executives conducted in January indicates that over 60 percent of US banks have made significant steps toward modernizing their payment infrastructures.

This and other findings show where the US banking industry is headed with a specific focus on payments.

Progress towards modernization

Compliance with ISO 20022 is mandatory for all jurisdictions. In the US, which was where our survey participants were based, financial institutions must comply with the ISO 20022 industry mandate by March 2025. There is still time to act, but time is of the essence. The survey asked participants to respond on their bank’s status with modernizing their payment infrastructure.