Navigating the ISO 20022 Transformation: What Corporates Need to Know About the Shift from MT to MX Formats

The financial industry is on the cusp of a major transformation with the global adoption of ISO 20022 messaging standards, particularly the shift from the legacy SWIFT MT (Message Type) format to the MX format. As the deadline for ISO 20022 migration approaches—most notably with SWIFT’s November 2025 cutoff date for full implementation—corporates, especially those engaged in cross-border payments, need to understand the broader implications of this shift.

While the migration has long been a subject of conversation among banks, payment processors, and regulators, the impact on corporates will be equally significant. In this article, we’ll explore how the ISO 20022 transformation will impact corporate systems, processes, and overall business operations.

A Brief Overview: ISO 20022 and the Move from MT to MX

ISO 20022 is a global standard for financial messaging that allows for more detailed, structured, and rich data exchange. The current MT messages used in SWIFT transactions are quite limited in terms of data fields, leading to inefficiencies and potential errors in cross-border transactions. MX messages, which adhere to the ISO 20022 standard, provide a more flexible and comprehensive framework for data exchange.

Key differences between MT and MX include:

• Enhanced Data: MX messages allow for more detailed payment information, which can reduce reconciliation times, improve compliance processes, and enable better data analytics.
• Structured Format: Unlike the free-text format of MT messages, MX messages offer a more structured, XML-based format that supports better automation.
• Interoperability: ISO 20022 is designed to be a global standard, meaning MX messages are more likely to be compatible with various systems and platforms across different regions and financial institutions.

Impact on Corporates: What to Expect

For corporates, this shift brings both opportunities and challenges. Let’s explore how the transformation will affect key areas of business.

1. Systems and Technology Upgrades

One of the most immediate impacts will be on corporate treasury and ERP (Enterprise Resource Planning) systems. These systems will need to be updated to handle the new MX message formats and ensure interoperability with banking partners and payment service providers.

• Upgraded Interfaces: Corporates will need to ensure that their payment processing systems can create, read, interpret, and send MX messages, requiring upgrades or patches to existing software.
• API Integration: As financial institutions increasingly adopt APIs for real-time payment processing, corporates will need to integrate their systems with these APIs to ensure seamless payment workflows.
• Data Management: The rich data embedded in MX messages opens up possibilities for enhanced data analytics, but this will also require corporations to invest in data management capabilities to harness and interpret this new information.

2. Changes to Business Processes

The richer data fields and more structured nature of MX messages mean that corporates will need to rethink certain internal processes, particularly around payments, reconciliation, and reporting.

• Improved Reconciliation: With more detailed payment information, the reconciliation process is likely to become more efficient. Corporates can expect to resolve discrepancies faster, but this also means that they will need to adapt their current reconciliation workflows to make use of the additional data.
• Compliance and Regulatory Reporting: The structured format of MX messages allows for easier extraction of data required for compliance and reporting purposes. Corporates dealing with anti-money laundering (AML), sanctions screening, and other regulatory obligations may find compliance processes become more streamlined, but they’ll need to update internal systems to capture and report the necessary data.
• Automation: The structured nature of MX messages enables better opportunities for automation in payments and financial operations, reducing manual intervention and human error. Corporates should look into expanding their use of automation in order to capitalize on the new efficiencies that ISO 20022 promises.

3. Strategic Opportunities and Challenges

Beyond the operational changes, the ISO 20022 transformation offers both strategic opportunities and challenges for corporates looking to modernize their financial operations.

• Real-Time Payments: ISO 20022 supports the growing trend toward real-time payments and open banking. Corporates can use this to improve cash flow management and gain better insights into liquidity.
• Global Interoperability: For multinational corporations, the adoption of ISO 20022 will make cross-border transactions easier, as they will be dealing with a single messaging standard across regions. However, this also requires corporates to be vigilant about local variations of ISO 20022 in different countries and to ensure their systems can handle these.
• Customer Experience: With improved payment transparency, corporates can offer their customers a better experience by providing more detailed remittance information, potentially reducing payment-related inquiries and disputes.

Preparing for the Transition: Key Steps for Corporates

To fully leverage the benefits of ISO 20022, corporates must start preparing now. Here are a few key steps to ensure a smooth transition:

1. Assess Current Systems: Conduct an audit of your current financial systems and payment processing capabilities to determine what needs to be upgraded or replaced.
2. Engage with Banks and Payment Partners: Coordinate with your banking partners and payment processors to understand their timelines and capabilities regarding ISO 20022. Establishing an open dialogue will ensure alignment during the migration process.
3. Training and Change Management: The shift to ISO 20022 will require employees, especially in treasury and finance departments, to learn new processes and technologies. A structured training and change management program can help smooth the transition.
4. Invest in Data and Analytics: With the richer data sets available through ISO 20022, corporates should explore opportunities to leverage this data for enhanced decision-making, cash flow forecasting, and customer service.
5. Plan for Testing and Implementation: Early testing with banks and other stakeholders will help identify any potential issues before full implementation. Corporates should take advantage of the testing windows provided by SWIFT and other financial institutions.

Enghofer Koch Consulting: Your Partner in ISO 20022 Transformation

At Enghofer Koch Consulting GmbH , we understand that the ISO 20022 transformation can be complex, but we’re here to help corporates navigate this change. From conducting an in-depth assessment of your current systems to executing the necessary system adjustments, we provide end-to-end support for a seamless transition. Whether you need to upgrade your treasury systems, streamline compliance workflows, or enable real-time payments, our team of experts can guide you every step of the way.

Conclusion: The Road Ahead

The ISO 20022 transformation represents a significant change for corporates, but it also presents a tremendous opportunity to modernize financial processes, improve efficiencies, and gain deeper insights into payment data. While the transition from MT to MX will require investments in systems, processes, and training, the long-term benefits of adopting this global standard will far outweigh the short-term challenges.

For corporates that act early, this transformation can be a catalyst for growth, operational excellence, and strategic advantage in an increasingly interconnected global financial landscape.

If you need guidance or support during this transition, Enghofer Koch Consulting is ready to assist you in making the shift efficiently and effectively. Please get directly in contact with me, Stuart Enghofer or Stephan Koch .