The best and most enduring innovations are those that create other innovations.
That's because innovation rarely happens in isolation.the most powerful push of Advances forward often build on existing knowledge, technology, or infrastructure.Each new Innovation leads to the next innovation, forming a continuous chain of progress.
And as a recruitment in March 2025 deadline for of ISO20022 Message format for the Federal Reserve approaches, financial institutions and payment processors alike looking to get ahead of the transition to do Be one of the first to embrace the data-rich benefits of the international standard for financial messaging developed by . International Organization for Standardization (ISO) Create a universal language for financial communication.
in the end, to do To derive and realize the true benefits of ISO 20022, it must be implemented end-to-end.
And most payment rails and global market infrastructure are moving to the ISO 20022 messaging standard. in the near futureIntegrating ISO 20022's rich data capabilities with existing innovations such as machine learning (ML) and artificial intelligence (AI) not only streamlines payments, but also provides many other benefits that improve operational efficiency. It is promised that it will be done.
This is because the ISO 20022 standardized data format ensures consistency and completeness of payment messages. When combined with ML and AI algorithms, this data uniformity enables automatic data validation, cleansing, and enrichment to improve data quality and accuracy. This reduces errors and exceptions, streamlines payment processes, and promises breakthroughs in driving efficiency and innovation in both financial services and payments.
See also: The cost of traditional payments considering the ROI of innovation
Data fusion and technological innovation
The integration of ISO 20022 and advanced algorithms is not just a technology upgrade, but an evolution of financial transactions.
of Glimpse Benefits of integrating ISO 20022 data capabilities with ML and AI include enhanced data quality, fraud detection, cash flow management, customer experience, regulatory compliance, decision making, business insights, interoperability, and Includes scalability.
This is a huge list of opportunities, but when combined with the many bottlenecks and frictions plaguing the payments industry, they fit like a glove.
By analyzing vast amounts of transaction data, ML algorithms can detect inefficiencies, predict payment flows, and reduce risk. By analyzing transaction data formatted according to ISO 20022 standards, these technologies can identify suspicious activity and detect fraudulent transactions. real timeadapting detection capabilities based on evolving fraud patterns.
See also: As cross-border payments modernize, interoperability and transparency will become key challenges
Compliance with regulatory requirements such as anti-money laundering (AML) and Know your customer (KYC) obligations are also an important aspect of payments process, Second, ML and AI can automate compliance processes by analyzing transactional data.
ISO 20022 messaging standardization makes it much easier and more effective for banks and other financial institutions to identify suspicious patterns and ensure compliance with regulatory guidelines, reducing the risk of fines and penalties.
ML and AI models fed with ISO 20022 data can also help enable real-time decision-making in payment processing. From approving transactions, routing payments through the most cost-effective channels, and adjusting risk parameters, these technologies enable organizations to make timely, data-driven decisions.
read more: ISO 20022 transition faces fragmentation and deadline pressure as deployment accelerates
Overcoming institutional inertia
The benefits of moving to ISO 20022 are particularly evident in both cross-border payments and business-to-business (B2B) payments, both of which have significant global trade volumes.
Many companies use enterprise resource planning (ERP) systems to manage their finances and operations, and the ISO 20022 structured data format works well with ERP systems, making it easy to integrate B2B payments data into existing accounting. and easy integration directly into the reconciliation process.
Still, some financial institutions have found themselves struggling with the transition due to resource and time constraints.
“We have been talking about the need for banks to: Upgrades and updates They've been using legacy systems for a long time. ” serena smithChief Customer Officer i2che told PYMNTS. “At some point, banks are going to have to deal with back-end systems not being properly managed,” she said. real time”
Like PYMNTS is doing. written, maximum efficiency in data and messaging standardization can only be achieved if everyone participates. And that onboarding is a process that is about as mature as existing payment workflows today.