Ever since SWIFT announced in 2022 that there would be a platform‑wide migration away from the old MT message format and onto the new ISO 20022 XML‑based format, banks have had a choice:
- A – Use an ISO translation tool on top of the existing bank infrastructure, or
- B – Undertake a full payment platform transformation and migration onto a native ISO platform.
Given the cost, timescales and available resources required for a full transformation and migration, many banks opted for the ISO translation tool approach, both as a means of meeting SWIFT’s deadline of November 2025 and to help mitigate some of the other risks posed by undertaking a full migration and transformation project.
A recent update from SWIFT suggested that 40% of all payment traffic globally on their network was still in the old MT format, suggesting a long tail of banks who will rely on translation tools to meet the new standard. However, while translation tools can accelerate migration, they come with several significant risks.
Here are five major issues:
1. Data Loss or Truncation
SWIFT’s MT message format is simple and human‑readable. ISO 20022 MX messages, built in XML, are far more complex with many additional data fields. Mapping between the formats is not straightforward, and translation can lead to data loss or truncation. ISO 20022 fields are often longer than legacy equivalents, so tools or intermediary nodes may cut off important information. Legacy systems may also be unable to store enriched ISO 20022 data even if translated, causing blocked payments, system errors and manual intervention. Missing data increases errors, disrupts AML processes, undermines reconciliation and increases operational cost.
2. Interoperability and Coexistence Complexity
Many participants will continue using legacy formats during the migration period. Translation tools must support coexistence between legacy and ISO 20022 formats. Different jurisdictions use different rules, versions and structures of ISO 20022, leading to inconsistencies and translation errors. Heavy cross‑border activity increases the likelihood of failures. Relying solely on translation may keep organisations dependent on the translation layer longer than intended, until SWIFT mandates further changes.
3. Legacy Systems and Data Models Not Fit for Purpose
Translation can mask the fact that core systems remain outdated and unable to handle ISO 20022’s richer structure and greater data volumes. Many legacy systems were not designed for ISO 20022 and will suffer performance, data quality and regulatory issues. Staying on translation tools long term prevents organisations from taking advantage of ISO 20022’s richer data, reducing operational efficiency and value.
4. Inadequate Compliance, Screening and Risk Controls
ISO 20022 supports structured, detailed data that compliance systems must process correctly. Legacy AML and screening tools often cannot accept new fields or longer field lengths. Translation tools may drop optional or conditional fields, weakening financial‑crime detection. Missing or improperly mapped data increases regulatory risk, false positives/negatives, and weakens the risk management framework.
5. Hidden Costs, Time and Maintenance Overhead
Translation tools appear quick to implement but create ongoing complexity, cost and risk. They add extra middleware layers requiring governance, versioning, and continuous updates as ISO standards evolve. Banks already maintaining aging systems may find the translation layer compounds operational strain. Organisations may end up paying for both translation and eventual system replacement — effectively doubling costs. Translation is a temporary fix and will not eliminate the need for native ISO migration.
Summary
Translation tools offer a short‑term route to ISO 20022 compliance but are not a long‑term solution. They introduce risks in data integrity, compliance, interoperability, cost structure and operational workload. Regulators are likely to scrutinise translation‑dependent institutions more heavily. Ideally, translation tools should serve only as a temporary bridge, with a roadmap to full native ISO migration within 1–2 fiscal years to fully capture the benefits of ISO 20022 and align with global standards.
