SEPA: The Future is Integration Management

Hubs versus engines is an interesting topic and one that traditional engine vendors also seem to find confusing - or help make confusing!  In my experience ‘engine’ suppliers seldom think of the requirements to integrate the engine into the enterprise, and this is where the cost and complexity comes from.  Only a very few can afford this approach now days, if any.  This is why they have all jumped on the ‘hub’ band wagon which is much more attractive.  A payment hub does consider the integration, workflow and management needs of payments flows, but it does not do all the processing, often continuing to use the legacy applications strengths, but normalizing the process and centralizing the management using new technology.  But it is much more that a pure integration play or framework (which means you have to build everything) as the hub must understand payments and what needs to happen to them.  The hub is therefore much easier to implement in a phased manner than an engine or a framework, and success can be measured. 

As for SEPA, until an end date set, the majority of the industry will continue to wait and see, which I also don't see as a reason banks are not upgrading their payments.  In fact we are seeing a growing number of banks realising that they need to upgrade and that real payment hubs offer a viable way forward to big engine projects.

I completely agree that bank take up of systems to address SEPA has been disappointingly slow and a phased process to migrate from legacy systems to a standard approach offered by the SEPA rulebook can help banks to make the jump.

Currently many banks are playing the waiting game on who takes the first step to make the changes and test the new approach, but this can’t go on. Banks must be more proactive and make some decisions regarding deadlines for migration. A bank with a system which fully supports SEPA will have a superb opportunity to capture a large portion of the market as corporates will migrate first to whichever bank enables SEPA payments.

In addition, the four corner model outlined in the SEPA rulebook needs to be more flexible and should include corporates and solution providers. Take up will be a lot quicker, if corporates can submit directly to ACHs through payments solutions.

We’re already seeing corporates looking for tailored payment solutions in preparation for SEPA Direct Debit (SDD). To this end, it will be corporates that will drive SDD as they will be ready to handle the changes.