In November 2025, the global payments industry reached a milestone nearly a decade in the making: the end of ‘coexistence’ for ISO 20022. For many banks, it felt like the finish line, but in reality, it was only the beginning. The real test is now underway.
Nearly half of banks, 44%, are not on track to meet one of the next major deadlines in November 2026. A small but significant share is already at risk of missing it altogether, highlighting how much work remains.
The next phase focuses on two major changes. Structured address data will become mandatory in cross-border payments, and banks must also adopt standardised workflows for exceptions and investigations. Without this, payments can be rejected, exception volumes can increase, and operational strain will rise quickly. In practice, that means disruption for clients and pressure on operations teams.
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The real challenge for banks is not the format of messages, but the scale and quality of the data behind them. Banks estimate that around 32% of customer address records remain unstructured across onboarding, CRM and payment systems. In some cases, the share is even higher.
Some banks are treating ISO 20022 as a messaging upgrade. However, it is a data transformation, and many banks are behind. The next phase of ISO 20022 will test whether banks can manage structured data consistently across systems, processes and customer interactions. Early signs suggest this is proving far more complex than expected.
ISO 20022 is changing how payments work
From November 2026, unstructured postal addresses will no longer be permitted in CBPR+ messages. Instead, payments must contain a hybrid or fully structured address format using defined data fields such as house number, street and city. What appears to be a simple formatting change is, in practice, far more complex.
Address information is involved in many different systems, including customer onboarding, core banking, payments, compliance screening and operational processes. Historically, this data has been stored in free-text fields and is inconsistent across different systems and jurisdictions. Converting this legacy data into structured formats requires a full overhaul of the existing systems.
Banks must also work closely with corporate clients to update payment instructions and ensure upstream systems can send structured data. This introduces a layer of dependency that banks cannot fully control.
Even institutions that have modernised internally can face issues if clients or counterparties are not aligned with the new standards.
As for payment exceptions and investigations, operational teams now have a new process of categorising issues, conducting investigations and coordinating with counterparties.
For decades, cross-border payment investigations have relied heavily on free-text messaging between banks. ISO 20022 introduces a shift toward structured workflows using CAMT messages, replacing free-text communication with defined data fields. This directly reshapes how payments operations function.
Once enforcement begins, systems will not accommodate incomplete or unstructured data. Payments risk being rejected, exception volumes are likely to rise, and operational strain will increase.
Legacy systems are the bottleneck
Many core banking platforms were not designed to support granular structured address fields across multiple national formats. Updating these systems will require not only a redesign of the current system, but also integration of new systems and extensive testing to make sure they are all operating correctly.
Around 60% of institutions report gaps in core banking systems when supporting structured address fields, highlighting how widespread these limitations remain.
Unsurprisingly, that level of change comes with a big price tag. Banks report spending around $20m on average to meet the 2026 requirements, with larger institutions spending closer to $30m. Many institutions are also deploying additional staff to support delivery, typically adding around a dozen specialists to ISO 20022 programmes.
And the updates don’t sit with just one team. ISO 20022 programmes involve payments technology, compliance, financial crime, operations and client services. That means without coordination, institutions can easily end up duplicating efforts.
Recent research suggests this is already happening in delivery. More than 60% of institutions say they are delivering ISO 20022 changes through several parallel programmes rather than a single consolidated transformation initiative.
Compliance is not the same as readiness
With so much happening at once, it’s not so surprising that banks are focusing on simply meeting the deadline. Indeed, the industry seems to be split in how it approaches the next phase of ISO 20022. Around 45% of the banks say they are implementing the minimum changes required to meet regulatory expectations rather than pursuing broader operational transformation. But this approach misses the real value of ISO 20022.
Structured payment data has the potential to improve transparency, financial crime controls, and enable automated investigation workflows. It can also give banks better visibility into payment flows and reduce operational frictions.
This is the chance for banks to truly modernise their payments operations and build systems that can support structured data.
Banks that focus on patchwork fixes will find themselves repeatedly reacting to the next deadline, and the one after that. Building the right foundation once is easier and more sustainable than constantly having to revisit the same problems every time a new deadline appears.
The next phase is already underway
The end of coexistence was not the end of migration, but the end of its first phase. A new set of deadlines is already approaching, with major changes required for structured addresses and exceptions and investigations workflows.
Once enforcement begins, systems will not accommodate incomplete data. Payments may be rejected, exception volumes will rise, and operational strain will increase, creating real disruption for banks and their customers.
ISO 20022 is now a multi-billion-dollar transformation. The institutions that treat it as such, and industrialise change across data, systems and operations, will be far better positioned than those relying on last-minute compliance.
Pratiksha Pathak, Head of Payments Services at RedCompass Labs
