Understanding the Key Differences Between ISO 20022 Vs. SWIFT MT
Communicating easily across borders and around the world is essential, especially in global finance. This is why financial institutions rely on methods of standardised messaging systems to help process all kinds of transactions. Two prominent and preferred messaging standards amongst the global financial institutions are ISO 20022 and SWIFT MT. While both of these systems achieve the same purpose of transferring financial information, they do, however, have key differences in the form of data richness, structure and global adoption.
Difference in Message Structure
There is a difference in message structure for both of these messaging systems. The ISO 20022 messaging system uses the IXML messaging format. This structure is more consistent and flexible and can be seamlessly processed by computers. Further, this format also allows for the information to be more detailed and structured in messages, which makes financial transactions more accurate and efficient. In comparison, the SWIFT MT system employs the proprietary format that is effective for a number of transactions, however, it does fail when it comes to handling larger amounts of data and other complex information.
Improved Data Richness
Another reason why ISO 20022 stands out in comparison to SWIFT MT is that it is able to provide more structured, richer and more precise data. With this capability, the financial institutions can benefit because they can provide more transparency and remittance information to their customers. Overall, this helps enhance customer experiences and services. On the other hand, SWIFT MT can process a number of transactions, but lacks as it can only convey a limited amount of data.
Global Adoption of the ISO 20022
The world of finance is witnessing a rapid shift to ISO 20022 from the SWIFT MT. Many financial institutions around the world have already adopted ISO 20022 or are planning to adopt it as a standard for payments and securities. This is majorly because of its ability to easily and efficiently handle high-value cross-border payments. SWIFT MT is still widely used; however, with time, it is gradually being phased out, with the world looking to shift to a more versatile and future-proof ISO 20022.
Bottom Line
ISO 20022 and SWIFT MT are both important when it comes to facilitating global financial communication. However, with time, SWIFT MT has become more outdated, and ISO 20022 is ready to take over the world with its flexible structure, enhanced data processing ability, and global adoption, making it a better choice for financial messaging in the modern day. With the help of ISO 2002,2, financial institutions can stay competitive and compliant in the globally dynamic finance landscape.