The time when financial institutions in the United States need to be compliant with new ISO standards — or ISO 20022 — is fast approaching, and the payments industry might not be fully equipped to handle it.

Robert Turner, general manager for financial services at Kyndryl, a New York City-based IT service provider that works with payments companies, says that many financial institutions the provider partners with aren’t ready to comply with the new standards just yet.

Research supports that notion. A study commissioned by the German software firm Seeburger last year found that only 63% of financial institutions would be ready for the switch by the 2025 deadline.

Turner says the situation has not improved since then.

ISO 20022 creates a common payments language for international payments with the goal of making the process faster and more efficient. The International Organization for Standardization wants banks and other financial institutions to be compliant with the updated standard by November of next year

The global financial messaging system Swift, which financial institutions use to move money internationally, is participating in ISO 20022, requiring the institutions that want to do business across the globe to adopt the standards.

Swift introduced ISO 20022 in 2023, and all messages sent on its platform must be compliant with the new standard by November of next year.

Editor’s note: This interview has been edited for clarity and brevity.

PAYMENTS DIVE: Why is this an issue now?

ROBERT TURNER: Some of the studies show that some companies out there aren't ready for the transition. [We’ve found] it's close to 50/50, or at least half have concerns about being ready for ISO 20022. We're a little over a year away from the time when companies are supposed to be compliant.

What needs to be done?

[Some institutions] are on old platforms for Swift … They're going to have to do something to develop or move to a new platform to meet all those requirements.

It's a big messaging change, and not just messaging on the front end. Some payment systems are not fully integrated end-to-end, and there's a lot to integrate as they make these changes. There are some data challenges as well. A lot of it is around modernization, or making sure [the applications they use] are modernized.

What part does Kyndryl play in this?

We have experience from the infrastructure side of it. We bring consultants who have deep experience in the payments industry.

We do assessments and workshops to look at architecture and end-to-end processes. We identify where there are gaps and close those gaps. We have a strong partnership with Intellect EU, which is a Europe-based company that has a Swift platform that is already compliant. If a customer is ready to move to a new platform, we have one (they can use to test their compliance).

Why are so many people unready for this change?

A lot of them have put it off. There are modernization challenges and concerns with having the right skills to be able to do this along with all of the other projects they have in their portfolio. There are also a lot of other regulations, things they're working on, and they need partners to come in and help them.

How is the United States doing?

U.S. businesses … are already behind in that space compared to Europe, and even in Central and South America, we have some catching up to do.