Totally key to SEPA success is the agreed field design of ISO20022 as the accepted industry standard for the payments industry. In order for SEPA to achieve its political objectives the banking industry and its corporate customers urgently need to sit down together and agree ISO20022 use and the relevant field descriptions. At the moment the corporates and the banks still have work to do to build an agreement that enables ISO20022 to be the accepted form of electronic message.

ISO20022 in combination with XML holds the technology solution enabling banks and corporates to move far closer together than ever before in bringing forth STP and cost reductions. This should also manifest price cuts by the banks for their corporate customers and hopefully eventually for individuals. The use of standardised communication messages should cause improved banking services and that should be one of the prime objectives of any company in a service industry.

It is obvious that new technical message standards for SEPA will be one of its most important features beginning a march towards commoditising processing and non competing operations within banks. With the implementation of new systems for new business offerings by banks, there is a very heavy workload in front of the I.T. departments in the European Banking industry.

Like many other service industries there is a requirement to engage the customer through the Web and in the case of financial institutions through private and public networks. All this communication needs to be linked to the various services and their operational processes. In some quarters this is called Straight Through Processing (STP) and in others customer services. The results of agreed communication and message standards are normally improved services at a lower cost. To achieve this attractive proposition standards are the key. It is therefore startling that at this late stage of SEPA execution that so many standards issues remain on the debating table.

There are problems for SEPA in these standards and they tend to centre on the data fields or the lack of them, depending on whether you’re a bank or a corporate. There should have already been an agreed design of message standards between banks and their customers long before now. It is typical of the finance industry that the customers are not considered at a primary stage.

With the benefits of SEPA long lasting and the changing of the payments industry it is a political imperative for the European single financial markets to arrive at definite implementation dates and it must be of prime focus to get vendor and buyer in accord.

There are also industry standards problems in the identification of customers by banks where BICs and IBANS or a combination of those are not accepted. There appears to be enough scope for there to be an agreement for the use of BICs and IBANS but so far intransigence in the committee rooms has maintained the debate with no solution yet obvious.

In conclusion, the fields within the ISO20022 and XML messages can only really be resolved by agreement between the banks first and then most importantly their corporate customers. To date industry standards, their creation and implementation are left in the hands of numerous committees. These are normally populated by the engineers of the industry who are not necessary the best characters to ensure action or may not have the responsibility to agree to give and get! So arguably the banks committees are not the best people to quickly agree solutions as their engineering culture, is to produce ‘the best’ technical solution, and they will not readily agree to timely implementation if it means compromise. By thought and deed therefore these committees are unlikely to be able to reach the compromise the industry needs hence business people need to insist on a date for agreement and should settle for nothing less.

By Gary Wright