Banks prepare for 2027 ISO 20022 E&I deadline

Banks must complete the move of exceptions and investigations (E&I) processing to the ISO 20022 messaging standard by 2027, and institutions are at different stages of preparation. Some banks have launched multi-year programs that align payments operations, technology and data governance. Other firms plan a series of targeted system upgrades without a centralized migration program.

Under ISO 20022, payment data fields and formats are standardized and more granular. The change covers return messages, queries and case management for failed or unclear payments. Structured data should make it easier to identify, trace and resolve exceptions across correspondent networks compared with legacy message formats.

A recent webinar hosted by RedCompass Labs brought together payments practitioners and operations leaders to discuss readiness. Participants included Pratiksha Pathak, Head of Payments at RedCompass Labs; Bobi Shields-Farrelly, SVP and Head of Payments Operations at PNC; and Scott Hamilton, a global payments and liquidity expert who moderated the session. Panelists reported uneven progress across banks and regions and urged organizations to assess readiness now rather than delay planning until the deadline approaches.

Speakers identified risks when banks upgrade systems independently. Uncoordinated changes can create interoperability gaps between upgraded and legacy systems, increase exception volumes and require manual workarounds. Banks that do not include end-to-end testing with correspondent networks risk longer investigation times and higher operational costs.

Panelists described operational measures of success: enriched data fields routed correctly, automated matching and resolution logic, fewer manual touchpoints for routine investigations, and shorter exception lifecycles. Achieving those outcomes requires aligned policies, updated workflows, investments in data quality controls and cross-bank testing cycles. Institutions treating the migration as a broad program say they are sequencing changes to allow time for systems integration and industry testing.

Regional uptake varies. European markets with earlier ISO 20022 use for other message types generally show more advanced preparations than some North American firms. Local market drivers, regulatory timelines and the extent of existing ISO 20022 usage influence how banks prioritize E&I work.

Industry participants emphasized the need for coordinated standards, joint testing and engagement with correspondent partners. With the 2027 deadline approaching, firms were advised to map current processes, identify gaps in data and systems, and agree test plans with partners to limit operational friction during the transition.