The world of international and domestic banking is undergoing significant change with the introduction of the ISO 20022 standard. The aim of the new system is to make payment transactions more secure and transparent.

International financial institutions are working intensively on the transition to this modern digital language, which directly affects businesses as well as banks.

But what does this mean in everyday practice for a financial manager, accountant or treasury professional?

The essence of ISO 20022 is detailed, structured and standardised data exchange. From now on, foreign currency payment transactions will be required to include significantly more accompanying information.

From 1 November 2026 (the date may vary by bank), all types of foreign currency transfers will also be required to include the beneficiary’s address details in a structured format, with at least the town and country entered in separate designated fields. Incorrectly provided data may result in the transfer being rejected or delayed. It is therefore particularly important for companies to review their partner data in good time and ensure that it is kept up to date.

In practice, the application of the new standard may provide businesses with tangible benefits in several areas:

• the number of incorrect or rejected transfers is reduced to a minimum,
• payments are processed more quickly,
• bank reconciliation becomes simpler,
• automated bookkeeping becomes more efficient,
• the quality and traceability of financial data improve.

At the same time, modernisation requires technical preparation on the part of businesses. Accounting and payroll software may need to be updated so that it can process the applicable XML files. To ensure a smooth transition, it is advisable to review the official technical guidance provided by the account-holding bank as soon as possible.

The transition will change financial processes and the way data is processed

The ISO 20022 rules affect both:

• manual transfers, and
• batch/file-based transfers.

In the case of manual transfers, the required more detailed information can simply be entered when the transfer is initiated.

For batch transfers, the standardised file formats prescribed by the bank are key elements of the transition. For example, in the case of the pain.001.001.03 file type used for SEPA transfers, the new system replaces the old, limited MT formats with an XML-based structure.

It is important that the exact message version and specification to be applied are always determined based on the guidance of the account-holding bank.

It is therefore important to contact the developers of the accounting and payroll software used as soon as possible to discuss the transition.

Key technical requirements for users

The transition to the ISO 20022 standard requires businesses to take the following technical steps and make the following modifications:

• Mandatory IBAN and Swift (BIC) format: (for both manual and file-based transfers). For all international transactions, bank account numbers must be provided in IBAN format, together with the bank’s Swift (BIC) code, in accordance with the requirements of the account-holding bank.
• Structured partner data: (for both manual and file-based transfers). The beneficiary’s name and address must be recorded in a structured format in separate fields. An incorrect format may result in the transfer being rejected or delayed.
• Updating ERP and invoicing software: (for file-based transfers). The systems must be capable of generating and reading the XML-based files prescribed by the account-holding bank.
• Modification of the file format: (for file-based transfers). The structured XML messages specified by the bank must be used instead of the previous text-based formats.

Preparations for the transition should begin in good time. A coordinated review of partner data, corporate systems and banking requirements can reduce the risk of payment disruptions. If you require support in reviewing your financial and accounting processes, our experts will be pleased to assist you.