ISO 20022 for corporates: the change you can’t ignore (even if you’d like to)
From Treasury Masterminds ISO 20022 is one of those initiatives that sounds like a banking problem… right up until it quietly lands on the corporate desk. Treasury, finance operations, IT, ERP teams, payments, compliance. Congratulations, you’re all invited. SWIFT’s ISO 20022 migration replaces legacy MT messages with MX (XML-based) messages. Banks are doing most of the heavy lifting, but corporates still need to pay attention. This change affects payment data quality, reconciliation, investigations, compliance, and yes, costs. This is a corporate-focused, neutral view. No hype. No fear-mongering. Just what matters. So what is actually changing? In very practical terms: MX messages can carry more detail: structured addresses, party roles, identifiers, remittance data. That’s a good thing. Until that rich data gets squeezed back into MT during translation and information gets truncated or lost. So no, this is not “just a formatting upgrade”. It changes how reliably information travels through the payment chain. “But we’re a corporate, not a bank”. Why should we care? Because this affects daily treasury reality more than most people expect. Payments and rejections ISO 20022 introduces stricter structure and validation. If your ERP, TMS, or payment factory relies on creative free text, expect more noise. Reconciliation and reporting In theory, ISO 20022 improves reconciliation. In practice, many corporates still flatten everything into legacy fields internally. If your systems don’t store the richer data, the benefit disappears before it reaches accounting. Compliance and investigations Structured party data supports: But if messages are translated back to MT somewhere in the chain, key details can still vanish. The uncomfortable reality: coexistence and translation We are in the “messy middle” for a while. During the transition you’ll see combinations like: SWIFT offers translation services to bridge the gap. Helpful, yes. Perfect, no. Important to understand: This matters for investigations, audit trails, and operational confidence. What this means in daily corporate life ERP and TMS readiness Even if you don’t connect directly to SWIFT: “Let the bank handle it” only works up to a point. Vendor and customer payments High-volume payment runs amplify small issues. ISO 20022 increases consistency, but reduces flexibility. That’s a trade-off corporates need to manage. Investigations and exceptions Expect: Runbooks may need updating. Very important: check your pricing This deserves its own section because it’s easy to miss. During the transition, SWIFT applies additional charges for MT to MX conversion and translation services. Key points corporates should be aware of: Now the corporate twist:Most corporates don’t pay SWIFT directly. Instead, these costs can surface as: What to do now Ask your banks and connectivity providers one clear question: “Are there additional costs during the MT to MX coexistence period, and where do they appear in our pricing?” If the answer is vague, dig deeper. Silence is not the same as “no cost”. A simple corporate ISO 20022 checklist Use this as a sanity check, not a project plan. Data Systems Banks Operations Costs Final thought ISO 20022 is inevitable. For corporates, the real risk is not the standard itself, but drifting through the transition without visibility. The danger zone looks like this: The smart corporate response is calm and practical:understand your data flows, align systems, challenge your banks, and keep control over the pricing story. That’s not transformation theatre. That’s just good treasury. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
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Key global trends shaping corporate FX hedging
This article was written in 2025 by our partner, MillTech In an increasingly volatile global economy, managing currency risk has become a top priority for businesses worldwide. As exchange rates fluctuate and financial pressures mount, firms are turning to FX hedging strategies to safeguard their bottom lines. This blog explores the key trends shaping corporate FX hedging in 2025, including the growing adoption of hedging practices and the impact of local currency movements on corporate decision-making. Hedging is crucial for tackling currency risk Why is hedging becoming more important for businesses? As financial uncertainty grows, an increasing number of businesses worldwide are taking proactive steps to protect themselves. In fact, 81% of companies across Europe, North America, and the UK are now actively hedging their currency exposure. Leading the charge is Europe, where a remarkable 86% of corporates are now hedging their FX risk—a dramatic rise from just 67% in 2023. This surge is likely driven by a combination of tangible market forces: rate differentials and sustained dollar strength have created persistent volatility, making it increasingly important for corporates to manage their FX exposure. What are the consequences of not hedging currency exposure? As market conditions continue to shift, 52% of businesses globally that don’t currently hedge their currency exposure are now reconsidering their approach. UK corporates are at the forefront this rethink, with 68% exploring new hedging strategies. What’s prompting the change? Most likely the financial consequences of inaction: three in four businesses worldwide have recently reported losses due to unhedged FX risk—underscoring the urgent need for more proactive and robust currency risk management. A cohesive approach to hedging strategies How consistent are hedging strategies globally? Corporate hedging strategies are demonstrating notable consistency across the globe. The average global hedge ratio is 48%, reflecting a broad alignment in hedging practices. Here’s a closer look at how different regions compare: When it comes to hedge duration, the variation is minimal, which further points to a uniform approach in managing currency risks: What do longer hedge tenors and consistent hedging strategies indicate? Longer hedge tenors typically indicate that firms are aiming to secure protection over an extended period, likely reflecting their efforts to gain stability amid a turbulent year for the pound. The limited variation observed in hedging strategies suggests that corporates globally are responding in a broadly uniform manner, adopting consistent risk management approaches as they navigate shared global uncertainties. How are domestic currency movements impacting businesses? Domestic currency movements are having a pronounced impact on corporates bottom lines, with 88% of firms globally reporting effects. North American firms have borne the brunt, with 92% citing challenges tied to a stronger U.S. dollar. How have trade tariffs affected currency movements? Tariffs imposed by the the Trump administration, alongside retaliatory levies from global trade partners, have added pressure to markets. These developments have disrupted markets and raised the cost of cross-border trade for both large and small economies. Interestingly, in the immediate aftermath of U.S. tariff announcements, the dollar has shown unexpected weakness—suggesting that the financial repercussions may initially be felt domestically before reverberating abroad. How have the euro and pound movements affected firms? Meanwhile, in Europe, 88% of corporates reported being affected by euro volatility. Similarly, in the UK, of firms felt the impact of a strengthening pound. However, there’s a notable difference in the consequences: Tighter lending criteria and heightened FX costs How is access to credit affecting corporates? Access to credit has emerged as one of the top concerns for corporates worldwide: “Tighter lending criteria is a common feature of turbulent economic times. If the average corporate earnings take a downturn, then lenders perceive a higher risk of defaulting on loans. This causes them to allow only the most creditworthy companies to borrow, particularly given higher interest rates. This tends to cause liquidity headaches and restricted investment opportunities.” Tom Hoyle, Head of Corporate Solutions at MillTech How have hedging costs changed for businesses? Another key trend impacting businesses globally is the rise in corporate FX hedging costs, with four out of five corporates reporting higher costs over the past year: Higher hedging costs demand a more proactive and considered approach from treasury teams, given that hedging decisions now carry more weight. CFOs must carefully assess their exposures, determine their hedging capacity, and be sure to choose the right financial instruments. Most importantly, they must strike a delicate balance between the rising costs of hedging and the potential risks of leaving exposures unprotected. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in Treasury Management or those interested in learning more about various topics related to Treasury Management, including Cash Management, Foreign Exchange Management, and Payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.