The Future of Cross-Border Payments is Now: Leveraging Swift ISO 20022 Migration Into a Strategic Advantage

A key attraction of fintechs is their agile solutions delivering a digitalized payment experience. Many banks utilize legacy payment systems and often find it difficult to compete and replicate the payment experience offered by fintechs. The cost of infrastructure modernization is significant, and banks need to find a balance between the technical changes required to address the regulatory and operations resilience or to improve their cross-border payment ecosystem.

The migration to ISO 20022 messaging standard is introducing a new global common standard for cross-border transactions. The Swift MX messaging under ISO 20022 facilitates the sending of enhanced data in a richer, more structured format as compared to Swift MT messages — which is anticipated to bring a wide range of benefits from interoperability, reducing manual intervention, improved and accurate compliance monitoring, operations resilience, and fraud management. The ISO 20022 messaging is expected to deliver an improved payment experience and is likely to create a single common language for most payments globally.

Leveraging ISO 20022 for digital transformation

Many banks are still looking at ISO 20022 migration as another compliance challenge that may consume their investment budget and distract them from the need to compete with fintechs for cross-border business. Banks need to start looking at the opportunities available to grow their cross-border business by adoption of ISO 20022 messaging standards. As the global payment ecosystem continues to evolve, there is increased customer demand across both retail and corporate customers for faster and cost-efficient payment methods. Banks have an opportunity to capitalize on the current adoption of ISO 20022 messaging standards to expand their cross-border payments offering.

The XML-based MX message format has several advantages over MT messages. It can carry much more data than the MT format, including a greater number of characters and fields. This means that it enables more structured formatting and richer data capture. In turn, this helps improves accuracy and efficiency (for example, by increasing straight-through processing rates and reducing errors) and supports cost reductions.

As a uniform message format, ISO 20022 MX improves global interoperability, which should further enhance efficiency. Most importantly, the MX standard is used for virtually all payment types, from ACH to instant payments. As a result, instead of potentially complicated and time-consuming system integrations for each payment type and the need to juggle multiple file formats, banks should be able to send payments in a single format to their local partner bank for routing via multiple instruments.

The ISO messaging standards are being adopted by all payment systems, with all new payment schemes based on ISO 20022 messaging standards leading to nearly seamless integration with the existing MX connectivity. In the future, when a country launches a new instant payment scheme available for cross-border payments, it can be immediately made available to banks.

At a stroke, the ISO 20022 MX format has the potential to open up a new universe of payment options for banks to offer to their retail and business customers, with a minimal amount of additional work required on their part. MX could therefore help banks to expand their payment offerings and boost their competitiveness with fintechs with minimal development effort and speed to market solution. As the early adopters of the ISO 20022 migration, some banks have managed to expand their cross-border payment offering within a matter of weeks and tap into incremental FX revenues.

WorldLink® via Swift MX: Enabling the future

While the ISO 20022 MX format will be instrumental in helping banks to modernize their core payment infrastructure to enhance efficiency and resilience, it will not automatically open up new payment opportunities for banks. To reap the benefits of migration, banks will need a partner that can connect the dots, with links to clearing systems globally and the advanced solutions necessary to deliver streamlined access.

Citi’s WorldLink® solution has long been a market-leading solution, enabling Citi’s financial institution clients to make cross-border wire payments in more than 135+ currencies, and ACH payments in 35+ currencies. As the payment ecosystem has evolved over the years, the range of payment options available via WorldLink has expanded significantly beyond traditional payment methods like wires and ACH. These options include a growing number of instant payment schemes and payments to digital wallets, and cards, that are expected. The cards payment option is expected to launch in late 2025.

Now, while other banks are still integrating Swift MX into their core payments, Citi has integrated MX into its expanded WorldLink capabilities. WorldLink is Swift MX ready to facilitate cross-border payments through a wide choice of payment methods — wire, ACH, instant payments, and payment to digital wallets, with payments to cards expected to be launched later this year. The entire WorldLink ecosystem for banks, including returns, reporting and reconciliation, will soon be available through Swift MX format connectivity.

By combining MX migration with a move to WorldLink, banks can benefit from its outstanding capabilities and global reach without extra costs or significant technical changes to their systems. Moreover, they benefit from Citi’s industry-leading consistency and reliability. More than 95% of WorldLink payment flows are via Citi’s global proprietary network, enabling control of the entire payment process, from service delivery to tracking. Banks can also look to offer competitive FX pricing by integrating FX APIs for live rates with their Swift MX based-payment processing. The expansion of the cross-border payment offering based on the Swift MX offering can be the first step by the banks to achieve digital transformation of their cross-border payment ecosystem as they look to adopt new age technical tools to enhance their payment experiences that deliver speed, cost efficiency, and transparency.

This bar chart illustrates the perceived threat of market share loss to fintech and disruptor companies within the next 5-10 years. The data is segmented by client type (corporate and retail) and analyzed across seven key competitive factors: Speed, Cost, Transparency, Reach, Security, Digital Solutions, and Other. For a more detailed description, please download the full report located at the bottom of the article.

WorldLink also provides transparency, both in terms of pricing and fees. With WorldLink, fees are communicated upfront, so the remitter knows exactly what they are paying. This could be a potentially valuable differentiator for banks.

Playing to banks’ strengths

In recent years, fintechs have set the pace in the world of cross-border payments by delivering an enhanced payment experience. The migration to Swift MX messaging provides banks with an opportunity to play to their strengths, leveraging their strong relationships with their customer base and the ability to provide a secure and complete suite of financial services beyond payments. Banks enjoy the “Currency of Trust” that comes from a long track record and ability to adhere to regulatory requirements.

Banks have already heavily invested in migrating from MT to MX in order to meet the CBPR+ deadline of November’ 2025. WorldLink provides banks with an excellent opportunity to expand their cross-border payment offering with minimal integration effort and without additional technical investments needed. Banks can now retain their cross-border payment wallets and compete with peer banks and fintechs through an expanded cross-border payment offering to facilitate payments in multiple currencies with a wide choice of payment methods from wires, ACH, instant payments and payments to wallets and cards.

As a trusted advisor to more than 1,500 financial institutions, Citi understands the key priorities banks need to address to stay competitive. By aligning the Swift MX transition with a shift to WorldLink, Citi can help banks to seize a unique opportunity to accelerate digital transformation and maintain market share in a fast-changing landscape.

1. https://www.alliedmarketresearch.com/cross-border-payments-market-A288119 

2. Source: Citi Future of Payments Survey