The Future of Payments: How Quality Engineering Supports Compliance with ISO 20022 and Real-Time Payments

With the rise of real-time payments, digital currencies, and the shift towards ISO 20022 messaging standards, financial institutions must navigate an increasingly complex industry landscape. To keep up with evolving regulations, market demands, and technological innovations, banks are increasingly turning to Quality Engineering (QE) as a critical component of their strategy.

QE plays a pivotal role in ensuring that financial institutions can remain compliant, deliver innovative payment solutions, and maintain resilience in an environment where both regulatory scrutiny and customer expectations are at an all-time high. This article explores the evolving payments landscape, focusing on the importance of ISO 20022 compliance and real-time payments, and how QE helps banks succeed in this new era.

The Evolving Payments Landscape. ISO 20022: The New Global Standard

ISO 20022 is a flexible global standard for financial messages that enables interoperability between financial institutions, market infrastructures and a bank’s customers.

It offers a more structured and richer data set compared to previous messaging standards like MT. The move to ISO 20022 is not just a regulatory requirement but an enabler of improved financial transparency, automation, and efficiency. It allows for better fraud detection, enhanced compliance with Anti-Money Laundering (AML) laws, and the potential to provide more customised services to customers.

The deadline for ISO 20022 compliance is set for 30th November 2025 for cross-border payments. With the one year countdown approaching, banks and financial institutions are feeling the pressure. The shift from MT to MX requires them to modernise their messaging infrastructure, which can be costly and complex if not handled properly.

The Rise of Real-Time Payments

Real-time payments (RTP) are another major development in the payments landscape. Consumers and businesses alike demand instant settlement of transactions, and central banks in several regions are promoting or mandating faster payment systems. In the UK, for example, the Faster Payments Service (FPS) enables near-instantaneous payments, while in Europe, the SEPA Instant Credit Transfer scheme allows for euro transactions within seconds.

RTP systems reduce the time taken to complete transactions, provide better cash flow management for businesses, and enhance customer satisfaction by delivering faster services. However, these benefits come with their own set of challenges, particularly around scalability, security, and regulatory compliance.

Challenges for Financial Institutions

While ISO 20022 and real-time payments present enormous opportunities, they also introduce significant challenges for banks. Key challenges include:

• Compliance and Regulatory Pressures: Adopting ISO 20022 is mandatory, and financial institutions face penalties, or exclusion from the payments space, for non-compliance. Real-time payments also come with stricter regulatory requirements, especially around fraud prevention and data security.
  

• Legacy Systems: Many banks are still reliant on outdated legacy systems, which were not designed to handle the rich data and instant processing required by ISO 20022 and RTP.
  

• Data Integration and Migration: ISO 20022 requires financial institutions to handle more structured data and ensure seamless integration across various platforms. Migrating from older messaging systems can be complex and carries the risk of disruption.
  

• Fraud Prevention: With real-time payments, the window for detecting and preventing fraud is incredibly short. Financial institutions need robust fraud detection systems in place that can operate in real-time without compromising transaction speed.

How Quality Engineering Supports Compliance and Real-Time Payments

Quality Engineering is a strategic approach that incorporates detailed planning, quality checks and testing throughout the entire software development lifecycle (SDLC), rather than relying on traditional testing methodologies that come into play after the development phase. QE helps banks navigate the challenges of regulatory compliance and real-time payments by ensuring the security, functionality, and resilience of their systems.

Ensuring Compliance with ISO 20022

Compliance with ISO 20022 is mandatory, but it also presents an opportunity for financial institutions to improve the way they manage data and transactions. QE can help banks deliver ISO 20022 in several ways:

1. End-to-End Testing for Data Integrity: The structured messaging format of ISO 20022 contains richer and more granular data than previous formats, which means financial institutions need to safeguard the integrity and accuracy of this data throughout its journey. QE facilitates comprehensive end-to-end testing, which ensures that data is correctly formatted and transferred without loss or error between systems.
   

2. Automation of Compliance Checks: Regulatory compliance is not just a one-time event; it requires continuous monitoring and updates. QE leverages test automation to ensure that compliance checks are embedded within the SDLC, automating the validation of ISO 20022 messages against regulatory standards. This reduces manual workloads, accelerates testing processes, and ensures that updates are implemented seamlessly across systems.
   

3. Scalability and Performance Testing: The richer data sets of ISO 20022 messages and the increased volume of transactions can put a strain on legacy systems. QE incorporates scalability and performance testing to ensure that banking systems can handle large transaction volumes without any degradation in performance, ensuring compliance and operational efficiency. Many organisations are using this compliance milestone as an opportunity to overhaul outdated infrastructure and replace it with modern, future-proof systems capable of supporting the evolving payments landscape. Additionally, QE ensures that these extensive digital transformations are implemented successfully without disrupting business-as-usual (BAU) operations.
   

4. Risk-Based Testing for Regulatory Updates: QE enables risk-based testing to ensure that any updates or changes in regulatory standards are thoroughly validated without causing disruptions. As regulations like ISO 20022 evolve, banks can rely on QE to ensure their systems remain compliant.

Supporting Real-Time Payments

Real-time payments present their own unique challenges, particularly around fraud prevention, scalability, and system performance. QE can play a critical role in helping banks implement and maintain RTP systems:

1. Real-Time Performance Testing: The key feature of RTP systems is the ability to process transactions within seconds. This requires robust infrastructure that can handle high transaction volumes while ensuring speed and accuracy. QE ensures that systems are capable of real-time processing by conducting rigorous performance and stress testing in real-world scenarios.
   

2. Fraud Detection and Security Testing: With the rapid pace of RTP, the window for detecting fraudulent transactions is extremely narrow. QE incorporates security testing throughout the SDLC to ensure that fraud detection mechanisms are integrated early on. This includes testing the robustness of fraud detection algorithms, real-time monitoring tools, and multi-factor authentication (MFA) processes to ensure that security doesn’t compromise transaction speed.
   

3. End-to-End System Resilience: Real-time payments require seamless integration between multiple systems, including core banking platforms, payment gateways, and third-party vendors. Any disruption in one system can have a cascading effect. QE ensures system resilience by performing end-to-end testing, identifying potential points of failure, and simulating different failure scenarios. This helps banks proactively address vulnerabilities before they cause real-world problems.
   

4. Balancing Innovation with Business Continuity: Banks must continue to deliver uninterrupted services while they implement new payment technologies. QE enables this balance by integrating testing into the development process, ensuring that new payment systems such as RTP can be introduced without disrupting existing services or compromising business continuity.

As the payments industry continues to evolve, financial institutions face the dual challenge of meeting regulatory requirements while implementing new technologies. ISO 20022 compliance and real-time payments (RTP) systems offer enormous potential to improve efficiency, security, and customer experience, but they also come with significant risks.

By embedding quality checks throughout the development process, Quality Engineering (QE) enables financial institutions to balance compliance mandates and transformational activities while remaining resilient and maintaining BAU. Whether it’s ensuring data integrity for ISO 20022, testing the scalability of real-time payments, or safeguarding against fraud, QE provides the tools and methodologies needed to drive successful digital transformation in the payments sector.

About Roq

Roq is a Quality Engineering consultancy dedicated to helping banks and financial services organisations deliver on their most critical technology initiatives, at pace. With deep expertise in complex, large-scale transformation projects—such as core banking modernisation and ISO 20022 compliance—we empower financial institutions to innovate securely and meet the evolving demands of the industry with confidence.

If you’d like to discuss your organisation’s requirements, reach out to us for a no obligation chat with one of our experienced Quality Engineers at ask@roq.co.uk or by clicking here.