Understanding SWIFT MT and MX

Whether you send money from one bank to the other or exchange information or trade securities, at some point in this process a SWIFT message will be exchanged. The acronym stands for Society for Worldwide Interbank Financial Telecommunication and is essentially a protocol for banks to talk to each other. SWIFT MT are the messages that exist since the 70's and identify the different "sentences" that the banks or other financial institutions will exchange with each other. They are identified by three letters (e.g. MT103, or MT505) each one representing a different message. While the first digit of the three represents the category of the message, the last two represent the individual message. There are hundreds of messages that can be sent in this way and are formatted in a rather complicated manner. Few people understand the complexity of these messages, and yet they are extremely important in a company. Fortunately, you can utilize them without needing extensive technical skills if you work with a professional payment system provider.

SWIFT MX is the new financial messages standard based on XML and ISO20022. The network can be used by banks, but also by companies of all sizes that need to transfer transactions. This system has been developed to eventually replace MT since they are much more flexible, allowing messages to be sent clearer and faster manner. This type of message protocol has a format that includes an alphabetic code that identifies the business area followed numeric codes that distinguish the message and the version. Even though for an outsider these messages seem rather cryptic, nevertheless for banks they are an essential part in their daily processes, therefore they are very interested in finding solutions to help them process these messages faster and more efficiently. The SWIFT MX is considered to offer banks much more flexibility and accuracy, which is why many banks and financial institutions have begun transition to this protocol. However, the transition is expected to last many years, which gives the staff who operates the software to learn how to use it.

The new message types simplify maintenance and reduce considerably the development timeframe. This ease of use makes it suitable even for smaller companies. There are a few specialized companies that offer banks and financial entities the necessary tools to implement the new standard and you shouldn't hesitate to contact them if you want to learn more. Some companies also provide their clients with the assistance needed to understand and complete the implementation effectively. Whether you are a bank manager or a software developer or a solutions architect, you will need to understand the SWIFT messaging in order to guide your company to the right direction. In addition, if the concept of automated bank payments is not very familiar to you, then it's important that you discuss with a professional provider and find out how these systems can streamline money management and help you deal with financial tasks. At a European level, the transition towards solutions such as SEPA is mandatory.