When the Federal Reserve migrated Fedwire® to ISO 20022 in July 2025, it wasn’t just a compliance milestone—it was a turning point. By moving to a global messaging standard built for structured, enriched data, U.S. financial institutions now have the foundation for automation, faster reconciliation, and entirely new services.
But not all migration paths are created equal. Some institutions have leaned on quick “adapter” or “converter” tools to meet compliance deadlines. These tools map legacy MT fields into the new ISO 20022 MX format, offering a short-term bridge. On the surface, it works—the system can send and receive ISO messages. The challenge lies in what gets lost in translation—that only a native solution can solve.
The Hidden Costs of Basic Converters
Adapter-based approaches ensure quick compliance, but they don’t take full advantage of ISO 20022’s capabilities—structured data, richer insights, and automation opportunities. Instead of using the structured remittance information, legal entity identifiers (LEIs), and detailed sender/receiver fields the standard was designed for, converters repurpose limited legacy data fields.
The consequences:
- Truncated records and incomplete data.
- Higher false positives in sanctions screening.
- Minimal ability to leverage ISO 20022 for automation or analytics.
Adapters provide a bridge to compliance, but they limit long-term potential. ISO 20022 isn’t static—new message types, required fields, and regulatory expectations continue to evolve. Each update threatens to break fragile mapping logic, forcing institutions into constant patches and costly rework. As Praveen Vinnakota, Senior Vice President and Payments Platform Lead at Alacriti notes, “Adapter solutions are an important short-term step. The challenge comes as the standard evolves—institutions will need to move toward native solutions to fully realize the benefits.”
Why Native ISO 20022 Matters
A native ISO 20022 solution captures and processes rich data directly, without translation losses. That enables:
- Better compliance: Structured addresses, IDs, and LEIs can cut false positives in sanctions screening by up to 30%, according to EY.
- Greater efficiency: McKinsey estimates that using ISO 20022’s structured data can automate up to 70% of manual operations, reducing costs by 20–35%.
- New services: From automated invoice matching for SMBs to enhanced fraud monitoring, richer message content enables entirely new products.
Real-world examples are already emerging: banks are embedding invoice numbers into wire messages for automatic reconciliation, municipalities are using structured fields for faster disbursement tracking, and cross-border payments are settling with fewer delays and lower costs.
ISO 20022 in the Future
For many institutions, adapters were the right choice to meet migration deadlines, providing an essential bridge to ISO 20022 compliance. But now that Fedwire has successfully transitioned, the opportunity lies in moving beyond compliance. Native ISO 20022 solutions make it possible to harness rich data for greater automation, stronger compliance, and continuous innovation.
Those that adopt ISO 20022-native solutions, by contrast, can turn compliance into a competitive advantage—cutting costs, improving risk management, and launching innovative services on a global scale.
Find out how financial institutions are already putting the standard to work in Making ISO 20022 Work for You: Post-Fedwire Migration Use Cases for Financial Institutions.
Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with TCH’s RTP® network, the FedNow® Service, Zelle®, Fedwire, ACH, and Visa Direct, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.
