SEPA: Communication, Communication, Communication!
In discussions about the single euro payments area (SEPA), a common theme often crops up among participants who are not strictly part of the banking establishment, but rather earn a crust from using their experience and expertise to help institutions prepare for eventualities such as SEPA. This common theme is that the banking community needs all the help it can get, or so the document ‘Making SEPA a Reality’, published by the EPC, would have us believe. Yet, it persists in reverting to type when it comes to sharing the information that third parties require in order to supply that help. In other words, it is saying ‘you can help us but restrictions apply!’
Software suppliers have complained that they cannot get access to the documents they require, such as those that will clearly explain what the new credit and debit payments will look like. What formats and standards will be used is one prerequisite to building suitable technical solutions and, of course, these are being discussed, but what about the scheme rules that surround the products and make them work? Software suppliers ask why it is difficult to access these documents and why so many of them are password protected ‘for members only’. Although many documents are available, for example, from the EPC, EBA and SWIFT websites, some are restricted because they are not yet complete or ready for full publication and others are simply designated for members or partners only.
Corporates have also not been involved as much as one might expect, even the large multinationals that are most likely to be affected by SEPA. These are the major users of the payments mechanisms that are being redesigned within the SEPA deadlines – the big salary file originators and direct debit collectors – and the bread and butter of the banks who supply them with payments services. Of course, the banks might argue that there is actually not much money to be made out of such payments anymore, that they are bundled with other services and represent a commodity offering – not much butter there, then, and certainly no jam – but nevertheless smooth running payments services are the lifeblood of banking and vitally important in maintaining the relationship between a corporate and its bank.
So where are the corporates represented under the SEPA banner? Both at the highest European ‘committee’ level and on a bank-by-bank basis, are they truly being involved, consulted and even asked to contribute to the rules and standards with which they will eventually have to comply if they and their banks are to benefit? Notwithstanding the best efforts of TWIST to champion interoperable and open standards, which of the various stakeholder parties are really involved in defining the standards and establishing the timescales and practicalities for their introduction?
Having worked for a big bank myself for 10 years in the UK, I can understand the issues of confidentiality when it comes to protecting one’s own products and initiatives and maintaining that important competitive edge. But, hold on, isn’t SEPA about building a new approach whereby banks provide new-look credit and debit payment mechanisms, governed by common scheme rules, throughout the euro area? Isn’t the idea that the competitive elements will be down to each individual bank’s ability to differentiate its products via value-added services and the pricing for these, rather than the core payment products? Are these not the key areas if banks are truly to charge customers the same price for an international (eurozone) euro payment as they do for an intra-country ‘domestic’ euro payment under the new regulations?
It’s easy to think that some banks are burying their heads in the sand over these issues. In fact, the ostrich and the emu are often confused, but the truth is that the cleverer banks are already ploughing ahead with their strategic reviews, product analysis and IT planning for the SEPA marketplace. They are not all shouting about it, of course, why should they when they can get ahead of the field by quietly getting on with things? But for every payment that is sent out by one bank, there is one received by the beneficiary bank, so even those who are ahead of the game may well suffer if their competitors are not as efficient. Those who have not yet faced up to reality will need to rely heavily on their third party suppliers when they find that they have run out of time to update their processes and prepare in-house systems. The interface with their customers will be a key area and this front end – not just back office processes and procedures – will be critical to success.
So what is precluding sharing information around SEPA? A cynic might suggest that the carefully developed products and schemes are not as advanced as they might be. In fact, the rules around the generic credit and debit schemes are still being fine-tuned. A pedant might say that rules are rules, and that you can’t just share information about highly sensitive subjects with everyone. A paranoid person might think that people will take that information and turn it against them. But, what about a little common sense here? Let’s call on the whole SEPA community to be open about what they are doing so that payment sector suppliers really do have the opportunity to ‘develop low cost new technological products and services which will serve the single euro market’ as the ‘Making SEPA a Reality’document suggests. This is also important for corporate customers to have the ability to dictate their business requirements in the process rather than having new and possibly expensive hoops to jump through to make themselves compliant. Communication is a wonderful thing and when deadlines are difficult to meet, and outside the control of most organisations, the more communication between all parties the better.
What would be useful is a gap analysis of who is doing what, against what needs to be done by all interested parties to make SEPA a success. In addition, a database of what information exists on the new SEPA schemes, products and services and how it can be obtained would be welcomed. Do these things exist somewhere already? Do they need to be organised? Any answers? Any volunteers?