Cross-Border Payments Need Unified Action as ISO 20022 Transition Faces Delays: ADB

The ADB’s ABMI Brief No. 13 explains why global banks struggle to adopt the ISO 20022 messaging standard for cross-border payments, citing poor coordination, premature regulation, and misaligned business goals. It urges stronger collaboration, shared frameworks, and user-driven governance to make global payments faster, safer, and more transparent.

The Asian Development Bank (ADB), through its Asian Bond Markets Initiative (ABMI), has released a detailed study on why the world’s financial institutions are struggling to adopt ISO 20022, a new international messaging standard designed to modernize cross-border payments. Written by Masayuki Tagai from Japan’s SAVEMERI and Yuji Yamashita from ADB, and developed with the ASEAN+3 Bond Market Forum (ABMF) and Cross-Border Settlement Infrastructure Forum (CSIF), the brief sheds light on the technological and institutional barriers slowing this global transition.

A Global Overhaul, Not Just a Format Change

The report stresses that ISO 20022 is not a simple “format update” but a fundamental shift in how banks handle financial data. For decades, global payments have relied on SWIFT MT messages, which contain unstructured data that humans can read but machines cannot interpret accurately. The new ISO 20022 system introduces structured, machine-readable messages, allowing automated fraud checks, faster processing, and better compliance with international regulations.

Despite its benefits, many banks have been slow to change. With the deadline for SWIFT MT migration set for November 2025, the industry is showing signs of “transition fatigue.” The report warns that many firms underestimate the effort needed to modernize legacy systems and align business strategies with technological requirements.

Why Cross-Border Payments Are So Complex

Cross-border payments have become increasingly complicated as more institutions, fintechs, and regulatory bodies join the ecosystem. Each transaction passes through a long chain of intermediaries, creating multiple points for data loss or misinterpretation. Unstructured data in current messages often leads to delays, misidentifications, and compliance failures.

The authors use a simple example to illustrate the difference: in unstructured messages, a customer’s name and address may appear together in one field, leaving room for confusion. In ISO 20022, each data element, such as name, street, city, and country, is separately defined, making it easier for systems to identify and verify customers automatically. Such precision is essential for fraud prevention, sanctions screening, and risk management.

The Five Barriers Blocking Progress

The brief identifies five key inhibitors to widespread adoption. First, many firms lack clarity about the business purpose of the transition. Managers often fail to explain to decision-makers how structured data will save time and reduce risk, leading to skepticism about long-term investments.

Second, there is no common global framework for implementation. Without shared benchmarks or guidance, each bank develops its own methods, resulting in fragmented systems. The authors call for global standards similar to the Basel Committee’s Standard No. 239, which governs risk data aggregation.

Third, financial misalignment creates additional hurdles. Because technology investments are treated as long-term assets, their costs affect profits over several years. Many firms delay upgrades unless they see immediate returns. The authors suggest aligning tech investments with business revenue cycles and sharing training and infrastructure costs through joint industry initiatives.

Fourth, regulatory pressure often comes too early, before the market is ready. Governments sometimes enforce new rules faster than banks can adapt, causing confusion. The authors recommend gradual enforcement, starting with voluntary pilot programs, to give institutions time to mature their systems.

Finally, the report criticizes top-down governance models that fail to consider practical realities. Many financial market infrastructures, such as clearinghouses, set policies without sufficient consultation with the banks and institutions that use them. The report calls for user-driven governance, allowing market participants to have a stronger voice in decision-making.

Building a Smarter Payment Ecosystem

Despite the challenges, ISO 20022 adoption is steadily progressing. More than 750 message types have already been developed for payments, securities, trade finance, and foreign exchange. In the United States, the Fedwire Funds Service completed its transition in July 2025, while international initiatives such as SWIFT’s CBPR+ and High Value Payments Systems Plus (HVPS+) are aligning domestic and global systems.

The brief also notes that the ISO 20022 standard is evolving. By late 2025, it will become syntax-agnostic, meaning it will support multiple formats, including APIs. This flexibility will make financial systems more interoperable, automated, and future-ready, key qualities for real-time, global financial communication.

A Call for Cooperation and Responsible Adoption

The ADB brief concludes that structured data is the future of finance. Once information is standardized and machine-readable, there is no turning back. But success will depend on collaboration between governments, regulators, and the private sector. The authors propose creating an interim orchestration body to bridge these sectors and ensure that implementation stays aligned with real business needs.

In more mature but fragmented markets, they even suggest a licensing system for cross-border payment providers, similar to how securities dealers are regulated, to maintain consistency and trust. Ultimately, the report argues that ISO 20022 is more than a technical reform; it is a transformation of the global payment landscape, one that could make international transactions faster, safer, and smarter if implemented with shared purpose and disciplined cooperation.