SEPA needs to change to be successful

...but how?

In one of my earlier posts, I mentioned that change needs to occur in order for SEPA to succeed. Over the course of the past few days at Sibos, it has become even clearer to me that three fundamental changes need to take place:

1. There must be an agreed end date for the existing legacy systems. Without a cut-off point to aim for, banks and corporates do not have a strong incentive to make the change over onto the new SEPA instruments. However, the important word here is 'agreed'. An imposed deadline will not work - there must be an agreed industry consensus.

2. There must be further discussion of how the basic SEPA product can be enhanced without creating market fragmentation - the very antithesis of what SEPA stands for. It is widely accepted that the SEPA instruments fall short of many domestic products in terms of sophistication and functionality. Moreover, additional optional services need to be offered in order to bring the corporates on board. However, the SEPA instruments cannot be enhanced at the domestic level - there has to be Euro standardisation.

3. And finally, a third party body needs to step in to oversee the SEPA project and drive the changes mentioned above. In the SEPA session this morning, it was agreed that co-operation between the private and public sectors must occur, and that collaboration of all the stakeholders is essential. It seems that there will be an ECB-sponsored SEPA Action Plan by the year end, but it is likely that an external body will need to take ownership of that Plan to ensure it is carried out. A business model for Direct Debits throughout Europe, and the multilateral interchange fee are just two of the thorny issues that would benefit from a touch of collaboration.