It was originally adopted by the European Committee for Banking Standards (ECBS), and later adopted as an international standard under ISO 13616:1997. Routing errors were therefore frequent causing payments to be delayed and incurred extra costs to the sending and receiving banks and often to intermediate routing banks also.
The British and Irish sort codes are only used for domestic money transfers. IBAN imposes a flexible but regular format sufficient for account identification and contains validation information to avoid errors of transcription. It identifies both the bank, and the branch where the account is held. All paper instruments presented to the clearinghouse must be MICR-encoded.