SEPA is causing the banking industry real trouble in finding a cost benefit purpose for becoming compliant. On the face of it the SEPA solution to the PSD (Payments Service Directive) has very little attraction to most payment banks. The efficiencies in operations and costs brought to European payments by SEPA are targeted at the corporates and latterly banking retail customers. However, the design of SEPA has fallen between two stools with a cost and development requirement expected of the corporate and bank, with the added burden for banks, that banking revenues will be hit, as free money is driven from the payments process. This explains why SEPA has been greeted with an almost apathetic response from most of the banking industry and frustration from the corporates, who although very willing to play, are not enthused about the investment in technology and changes in operations necessities caused by SEPA. A further concern for corporates is the lack of any serious attempt by banks to sell new SEPA compliant services at an expected, reduced charge.

The market situation is to say the least a little fragmented as SEPA looms in January 2008. According to Damien Malloy from Sentenial, a leading software company, specialising in SEPA solutions. “The banking industry may be as much as 85% non compliant, with only a few months to go to implementation”.

Sentenial have been very close to the coalface as SEPA has struggled to gain universal acceptance and take up, and are an excellent barometer of the markets position. Sentenial maintain that Banks should have focussed sooner on the upside of SEPA and the client relationship benefits, instead of the more simplistic, just compliant. Sentenial maintain that Banks will be challenged by their clients on their relationships as SEPA takes hold and they need to concentrate on delivering new service offerings and a new commercial pricing structure.

It is still not too late for banks but as time lags they will find that increasing competition will emerge for their existing business and the waiting corporates will jump ship to go with banks that offer SEPA services at the price they like and with minimal changes to their operations. This is beginning to look like a business case for banks to innovate SEPA solutions.

Sentenial have been innovating solutions for SEPA and looking beyond the basic systems functionality requirements that banks have been concentrating on and developing some state of the art technology for Direct Debits in SEPA. Many of the banks and other software suppliers have focused on the SEPA engine but Sentenial had already got this covered and able to look early into the real problems of SEPA direct Debits and become the first supplier with a systems solution. This is real enterprise on the part of Sentenial as the market is still struggling to come to terms with SEPA Direct Debits. But a little knowledge goes a long way and in the case of SEPA a lot of knowledge goes a lot further and finds an imaginative solution. Sentenial have Direct Debits already running as a listed service according to Damien Malloy. This will give Sentenial a huge advantage over their competitors and should attract a swarm of banks and corporates.

According to Damien Malloy “A number of banks will be ready for SEPA credit transfers by a whisker but not direct debits” and this view appears to be confirmed by a number of other software companies at SIBOS this year. It is therefore laudable that Sentenial have got on with the job to create their systems solution. This company is unique in its field and deserves to make a killing in the market for their product. They are a talented bunch at Sentenial as I witnessed first hand this year at SIBOS, when much to my surprise their executive officers played guitar and sang happy refrains to the invited guests at their party. This talent obviously extends to business where a keen eye for the market is as good as their ear for a tune. This will be the testimony of anyone who attended their SIBOS stand and their party. Their SEPA direct debit solution will cut the mustard in the market as much as their Irish gig entertained in Boston.

By Gary Wright, MSI