ISO 20022 - Setting new standards for payments

A new standard for growth: How ISO 20022 will redefine South Africa’s payment frontier

As payment systems worldwide transition to ISO 20022, financial institutions in South Africa find themselves facing both opportunities and challenges. With a focus on compliance, data analytics, and strategic consulting, Elenjical works with clients to help them adapt to this global standard. Here, its experts analyse how ISO 20022 is charting a new course for the fintech industry.

As South Africa’s fintech ecosystem evolves, payment systems are undergoing a transformative overhaul in line with global trends. Banks, businesses and individuals all want payments that are as secure and instant as the rest of their digital lives. This is a here-and-now challenge - as South Africa’s economy becomes more digital and interconnected, the payment sector must juggle the limitations of legacy systems, embrace innovation and adapt to a new era defined by ISO 20022.

ISO 20022 - a global messaging standard designed to enrich financial communications - promises to make South Africa’s payment systems smarter, faster and more secure. With a transition deadline of November 2025, South African institutions face a fixed timeline for adopting this new international compliance standard. As Elenjical’s experts explain, the change is not without its challenges. The journey to effective adoption of ISO 20022 requires balancing cost, technological adaptation and workforce readiness - all while promising rewards that will redefine financial services for years to come.

The power of standardisation

“The ISO 20022 transition is a chance to streamline South Africa’s payment systems with the scalability and versatility needed to thrive in a globalised economy,” says Michael Eagleton, Executive at Elenjical (ES). “By moving away from the outdated SWIFT MT messaging format, ISO 20022 introduces XML, a standardised, extensible format that enables richer and more detailed transaction data. This enriched data facilitates a deeper understanding of each transaction, enhancing the ability of financial institutions to detect fraud, improve transparency, and meet regulatory requirements.”

The new format not only increases data richness but also paves the way for improved interoperability, a feature critical in a market that relies on cross-border transactions. With ISO 20022, transactions between different financial institutions-and even those spanning different continents - will flow with unprecedented clarity and speed, minimising the manual interventions that often cause delays and operational risks. For South Africa’s financial institutions, this shift will not only modernise operations but also reinforce the country’s position as the leading regional financial hub.

Bespoke personalised finance

Perhaps the greatest potential of ISO 20022 lies in its compatibility with advanced technologies, such as artificial intelligence and machine learning. South African financial institutions have a unique opportunity to use these tools to improve services and the customer experience. As institutions feed the richer ISO 20022 data into AI-driven systems, they open up new possibilities, from personalised banking services to advanced fraud detection.

“Consider, for example, the potential for banks to use AI algorithms to analyse transaction patterns,” points out Lakshmi Nair, a Principal Consultant at ES. “With ISO 20022’s detailed data, AI systems can detect subtle anomalies, flagging suspicious transactions in real time. Beyond security, this wealth of data will allow banks to create bespoke services tailored to customer preferences, such as customised financial products or loyalty programmes. In this way, South African fintech firms can turn the global standards shift into a customer-focused innovation push, differentiating their offerings in an increasingly competitive market.”

The standardisation that ISO 20022 brings will facilitate real-time payments through automation, enabling near-instant transactions that require minimal human intervention. This capability is transformative for both businesses and consumers in South Africa, where the demand for secure and rapid transactions is high. Through Straight-Through Processing (STP), financial institutions can eliminate bottlenecks, cutting the time and risk associated with current manual processes. Interoperability also takes a leap forward with ISO 20022, as financial institutions share transaction data with a new level of precision. This standardisation simplifies the process, creating a fluid experience even for cross-border payments - a key advantage for South Africa, where global trade and remittances play a vital role in the economy.

No one said it was going to be easy…

Every evolution comes with hurdles. Whether implementing ISO 20022 or adapting existing SWIFT MT systems, it demands a significant investment in both financial and human resources. South Africa’s financial institutions face the complex task of upgrading legacy systems, training new and upskilling existing employees, and conducting extensive testing to ensure compatibility. The challenge of managing dual systems during the transition period - SWIFT MT and ISO 20022 - can create interim inefficiencies and increased operational complexity.

Prosper Mubhau, Murex BO Consultant at ES, says: “Adopting the new global standard requires banks and fintech firms to navigate both technical and operational changes. At Elenjical, we are already making this transition seamless, ensuring the process is as straightforward as possible and helping clients confidently embrace the transformation,” he adds.

Future-ready finance

With ISO 20022, South Africa’s financial sector is entering a new era in payments. Embracing its benefits will set the stage for a payment ecosystem that is extensible, efficient and aligned with international standards and best practices. South Africa’s fintech industry is keeping pace with the global transition, and in places helping set the standard for it.

Article originally published in BusinessBrief February/March 2025 edition, p70-71