Changes in the financial services industry that are spawned from non business related drivers are always going to tread a difficult path to eventual implementation and the Single Euro Payments Area (SEPA) is no different. The problems with SEPA were highlighted clearly by Gianfranco Tabasso, from the European Associations of Corporate Treasurers at the recent European Banking Association (EBA) day in Rome. He bemoaned the lack of inclusion of European Corporates into the SEPA design and the implementation project. Making a strong case for Corporates to be included in the financial supply chain if the objectives of SEPA are to be achieved in the most cost effective and efficient means possible. This impassioned plea for cooperation between customers and their suppliers may not be too late to have a positive effect on SEPA. However, time is short and the work still needed to be completed large, so a fast track approach will be needed by all concerned, to give it any chance of success.

Fast tracking probably means cutting through the many committees already established, in many parts of the supply chain and putting a number of personal egos aside. In effect an overarching management structure, given empowerment and responsibilities, to achieve SEPA’s objectives, this would establish the first ever management producing the strategic service and systems functionality requirements needed as much by the banks as the corporates and retail customers.

If there could be a cull of the existing committees to streamline the decision making and delivery channels, to enable the production of clear and concise specifications, the whole financial industry supply chain would benefit. If corporate customers of banks can agree at the outset, objectives and design plans the industry would not struggle as much, with obvious industry benefits brought by SEPA. Standards would be agreed and taken up at an earlier stage and debate kept to a minimum for the benefit of all.  

In the software industry Sentenial has shown the payments industry the way to succeed with SEPA by listening to their corporate customers and marrying the functionality requirements for Direct Debits with their banking customers. With their understanding of both sides of the payment, Sentenial has made itself a market leader for their Direct Debits solution ‘EuroDEBIT DDM’ as proven by their position in having the first software to be compliant for SEPA Euro debits.

With over 500 corporate clients using their software Sentenial have a pivotal position and are possibly the most important software house in the market enabling SEPA to more successful in January 2008. However, the Direct Debit deadline of November 2009 is the main focus for Sentenial and that arguably will also be of greater importance for many in the payments industry.

Any creation of a management group for the management of the European payments industry would be wise to include Sentenial and take advantage of their capability to produce economic systems solutions as is most certainly the case with Direct Debits.

Sentenial are also building a partnership programme with banks and other software houses where their produce can be integrated as a key enabling component producing a solution for Direct Debits in a trice.

Brian Hanrahan from Sentenial is bullish about SEPA and exudes confidence in the eventual success of its implementation and the enormous operational efficiencies it will bring to the ‘Bank to Bank’ and ‘Corporate to Bank’ space. Brian says “What we are seeing in the marketplace is that ever increasing numbers of banks and corporates are viewing SEPA as an opportunity to implement business value improvements by replacing some of their oldest legacy systems with modern & flexible vendor solutions“

The resulting cost savings for corporates are well documented as are the probable revenue reductions of the banks, but if the payments industry is to move towards a 21^st Century business, the rebalancing of costs is necessary and indeed desired. There will be a mass remodelling of operations and pricing across the payments industry and it is almost certain, that what banks will lose on the one hand, they will gain on the other.

Sentenial has a role to play by innovating software functionality to drive operational costs down in the payments industry, allowing for profit margins to be maintained at banks and the corporates, where the gross revenue can be reduced to the overall benefit of retail customers.  

In conclusion as the January 2008 SEPA live date looms, there is still too much debate within the banking industry and their corporate customers, to be confident that, the take up and wide scale impact of SEPA will be anything more than of modest proportions, at least initially. If the payment industry can get its act together fast SEPA will have a far better chance of success.

However, Sentenial appear to be one of the firms engaged in SEPA able to be totally focussed on building a product and business that sits uniquely between the corporates and the banks for the thorny problem of Direct Debits. So Sentenial has the ability to score on both sides and at this stage looks a sure fire winner for their investors and customers alike.

By Gary Wright