Bankers and corporates do not expect to meet a 2014 deadline for Sepa compliance, according to a straw poll of delegates conducted during a panel discussion of the controversial payment initiative at the annual congress of banking co-operative Swift.
The session, entitled 'Sepa - will the market finally move', was convened to debate the European Commission's proposals to impose a probable 2014 deadline for the switchover to the new pan-European payments instruments.
The naysayers on the floor held a slim majority over the optimists, although a clear majority of delegates expect the introduction of Sepa to encourage more innovation from banks in a payments industry that is being increasingly dominated by non-bank entities.
On the podium, the assembled panelists - which included representatives from Dutch, Spanish and Swiss banks as well as a European Central Bank adviser - were divided as to whether there were any obstacles in the current regulations that would prevent a 2014 implementation.
Mark Buitenhek, global head of payments and cash management at ING, said that the new guidelines on direct debit could derail implementation efforts. "Banks are being asked to change what has been a one-way system into a two-way system and this will take time. I recognize that there needs to be balance between consumer protection and efficient systems but I think these new rules go too far and are too demanding for banks and corporates. Either banks redesign their DD systems or the regulator redesigns the rulebook."
Javier Santamaria, assistant general manager for Sepa payments at Spain-based Banco Santander and also a member of the European payments Council's Sepa working group, disagreed and declared that "the rulebook is fit for purpose".
There was some concern at the level of detail required in the regulators' latest proposals, notably the mandate to implement the XML ISO20022 standard, amid suggestions that the process would be too cumbersome. However, there was also an acceptance that banks must move beyond complaining about the regulator's proposals and focus on completing the implementation.
Furthermore, banks should also use Sepa as a foundation for developing new and innovative payment services to compete against the increasing number of non-bank entities operating in the payments sector, including Paypal, Facebook and a number of mobile operators.
"The reason we have the regulation is because we [the banking industry] could not come up with anything ourselves that the market liked," said Buitenhek. "If we implement Sepa correctly, we will lose revenue because that is how standardisation works. So we need to find new ways to make revenue and we need to do this together as an industry."
European banks could be encouraged by the fact that the XML ISO20022 standard and the principles of the Sepa initiative could be adopted by a number of other markets. A pilot project featuring 15 African banks from Namibia, Lesotho, South Africa and Swaziland took place last year. And when asked whether the Sepa concept was likely to expand outside of Europe, the audience voted overwhelmingly in the affirmative.
However, given the skepticism of European banks and corporates over the 2014 deadline, this does raise the potentially embarrassing possibility of the first business-ready Sepa-style system being implemented somewhere other than Europe.
Finextra verdict Given the ongoing crisis in the Eurozone, perhaps a more pertinent question - and topic for debate - would have been: "Is Sepa still fit for purpose?" We may just pop along to the ECB stand and ask them the same question.