The recent EBA day in Rome highlighted many of the issues of the SEPA debate but fell short of presenting all the solutions to the many problems now mounting as the January 2008 SEPA live date looms. There was a high degree of positivity from the lectern and in the exhibition hall that SEPA was going to meet its objectives and become a major enabler of better payment services at a cheaper price by the European banking community. However, many of the banking delegates attending and representing some of the leading banks in the payments industry had worried frowns and were expressing concerns about the current market status of SEPA preparation and the likelihood that it will be as dynamic and as widespread as hoped.

The banks have been expressing doubts about the current status of SEPA as banks have yet to market new services to their corporate customers and technical issues around the structures of ISO20022, XML and the identification issues of BIC and IBAN. It is no wonder that at this late stage, fundamental questions cannot be answered, dimming confidence and producing much confusion at banks in many different EU countries.

SEPA is a European payments standardisation project but is producing varied problems and uncommon projects within each European Union country as the laws, rules and structures for payments differ. A standardised approach to SEPA implementation is proving a massive headache for all concerned with SEPA implementation. As each bank and each country try and produce standard SEPA solutions their ability to meet the January 2008 deadline varies and there appears to be a risk that SEPA will look different in each market, in each country at the outset, even though the objective is the same.

The hesitation of banks to approach SEPA as a development project with opportunities for competitive service offerings to corporate customers has hindered the corporate customers in determining their own SEPA projects. There appears to be a significant possibility that SEPA could actually create a more fragmented payments industry in the short term. At the moment EU countries appear to be moving more to a SEPA solution that differs between states. This could lead to a SEPA landscape with as many multiple choices as exist today. It’s strange that a European objective to standardise payments across all EU states, could end up causing more diversity. Unless the corporates engage themselves to find mutual solutions with their banks, there must be strong doubts whether there is any real possibility of high success in the take up of SEPA in January.

To achieve a high percentage of SEPA use from January 2008 the banks need to agree as an industry, important standards and details of how each bank will not only comply with SEPA, but with agreed market practices. This is clearly a case for the Euro Banking Association (EBA) to bring together the organisations like EACT representing corporates.

Different banking and markets within each country’s SEPA requirements will lead to a multitude of different solutions and the EBA could bring some common approaches and more management control of the industry project.

There has to be a curtailing of the debate with more action in the decision making process leading to an accelerated implantation. The EBA could assist in the creation of the forum with corporates to ensure solutions meet the customer’s requirements. It hardly seems worth it to devise a solution that deters use by the customer!

If there is much more debate it will prevent banks and corporates from taking the dynamic decisions they need to or SEPA projects will be delayed and January will see a very modest take up.

Another disturbing aspect is too much intrusion by consultants in the banking debate and this will further instil an environment of discussion around specifications rather than the action that needs to be taken. The consultants should be earning their contracts, from implementation rather than taking part in the creation.

The software vendors are well advanced of the banks in appreciating the end business impacts of SEPA and are producing systems that achieve them. But the banks are in need of direction and a wider knowledge of the payments solutions for their SEPA problems, as the technology already exists to enable most of the SEPA objectives. The EBA could become a library of knowledge and a source of distribution providing a forum for the banks and corporates to better appreciate the solutions on offer from the software vendors.

However, this wider knowledge of SEPA products depends on the ability of vendors to market their solutions, but this can also bring confusion to the buyer, how do they know which systems to chose that best suit their needs.  Software vendors could really assist the banks if they could be brought closer to the projects, helping to forge and align the banks business and technology development plans.

The EBA has a huge role to play if SEPA is going to meet its objectives in January 2008 and in the forthcoming years.

By Gary Wright