While the coexistence period for using MT messages by financial institutions expires in November 2025, this deadline does not apply to corporates. However, there are several reasons why it makes sense to adopt ISO 20022 as soon as possible.

“The channels that banks are using today to exchange traffic will be extended to allow corporates that are connected on Swift to start exchanging ISO 20022 with the same capabilities, such as network validation and interoperability with other standards like those for cross-border or instant payments,” says Brice Goemans, Corporates Product Owner at Swift.

Making greater use of structured data is a sensible strategy given that unstructured addresses will no longer be used in cross-border or high value payments from the end of 2026.

One of the reasons why the cash reconciliation process is painful for many corporates is that the information included in MT940 messages is limited. Making use of the new XML formats enables corporates to automate this process.

“They don’t see it as a burden, but rather a way to improve data processing and facilitate the cash reconciliation process,” explains Kevin Braeckman, Director at PwC treasury consulting.

ISO 20022 will also facilitate the trend for more extensive reporting suggests Wim Grosemans, Global Head of Product Management at BNP Paribas. “Beyond a messaging format change there is also a paradigm shift where corporates are asking much more for real-time reporting in various use cases as well as reporting outside of business hours,” he says.

Corporates could be left with a scenario where they are handling messages in different formats as their banks upgrade at different times. Braeckman advocates an ‘if it isn’t broken, don’t fix it’ approach, but adds that if a corporate’s bank doesn’t want to convert messages from the previous standard the options are to either deploy middleware between the bank and the ERP system, or set up different posting rules for certain accounts or banks.

“The starting point is how happy you are with your current arrangement,” he says. “If it doesn’t work, this is your opportunity to ask your bank to start sending richer information.”

According to Bob Stark, Global Head of Market Strategy at Kyriba, every corporate he deals with is looking for opportunities to streamline, automate and get access to more data to drive decision-making.

“This is a great opportunity for corporates to send a payment using this type of message and reconcile that payment much more easily on the back end,” he says.

There is also an expectation that regulatory supervisors will start imposing additional rules. Examples of existing rules include the need to have an address in a structured format to facilitate sanction screening by banks – for certain types of dollar payments it is mandatory to send the payment with a structured address.

“If you don’t do it, there is a risk that the payment goes into an error queue and needs to be ‘repaired’, leading to delays in executing the payment,” explains Braeckman. “So although it is not mandatory, we are highly recommending our clients start looking at the vendor master data to make sure that the additional fields are in there, but also start preparing for the change to XML.”

Another significant development is that the latest XML version also has a field for the legal entity identifier or LEI code.

“At some point, regulators will ask for the number of the supplier – the person you are paying – in the payment file to automate sanctions screening and make sure that payments are not stopped because of false hits where the name of the person being paid is close to that of someone on the sanctions list,” adds Braeckman.