ISO 20022 is the definitive global standard for financial messaging, which aims to regulate the electronic data exchange between financial institutions. As more countries look to adopt this standard to enable faster payments, improve the customer experience, and facilitate automation, news of the UK’s central bank revealed that its payments system had successfully been upgraded to the ISO 20022 standard.
Known as The Clearing House Automated Payment System (CHAPS), it is considered one of the largest high-value payment systems in the world, providing settlement risk-free, streamlined, and irrevocable payments. The Bank of England assumed responsibility for the CHAPS system in November 2017. It was also used to settle an average of £395 billion daily in 2022.
Some of the main functions of CHAPS include facilitating the settlement of money market and foreign exchange transactions for some of the UK’s largest financial institutions and businesses. Corporations also use CHAPS in order to issue time-sensitive and high value payments to suppliers and to pay taxes. Consumers can even use CHAPS to purchase high ticket items, such as a car.
The Bank of England’s successful migration to ISO 20022 reveals a significant achievement within its multi-year scheme to renew its Real Time Gross Settlement Service (RTGS). The objectives of the scheme include improving resilience, innovation, as well as competition within the current payment landscape.
In a prepared statement, Victoria Cleland, Executive Director of Payments at the Bank of England noted:
“The introduction of the ISO 20022 financial messaging standard marks a major milestone in our mission to enhance our RTGS and CHAPS services: critical infrastructure at the heart of the financial system. In an increasingly globalised payments world, harmonisation of messaging through ISO 20022 will enable more systems to speak the same language and ultimately enhance cross border payments. The move to ISO 20022 is a key element in the Bank’s RTGS Renewal Programme and meets one of our commitments to the Financial Stability Board’s Roadmap to Enhance Cross Border Payments.”
Race Before the Deadline
While many organizations and financial institutions would agree that there are plenty of benefits to adopting ISO 20022, data reveals that they’re actually behind as the deadline of November 2025 draws near.
Recent data found that of the 11,000 global banks belonging to the SWIFT network, only 72% will be ready to fully migrate by the deadline.
One of the biggest hurdles that most banks and organizations must overcome is to upgrade their current payments systems. This is especially true if they are still operating under outdated legacy systems.
