European Central Bank calls for 'urgent' action on Sepa

Even among banks, the take up of SEPA instruments has been slow since the introduction of SEPA Credit Transfers earlier this year. As a European-wide initiative which is mainly driven by the banks, it is not yet clear, however, whether their corporate customers intend to or are able to make use of the service next year.

In order for corporates to see the benefits of cross-border SEPA payments, next year’s introduction of SEPA Direct Debits not only requires the banks to listen to their corporate customers, it also requires the harmonisation of all EU members’ legal framework for payments in line with the Payment Service Directive (PSD). Despite the challenging economic climate, financial institutions must readdress SEPA by thinking about how the new payment instruments can benefit their customers and not just be a tool for creating payment efficiencies. As such, Europe’s banks need to look at the opportunities SDDs will create for their corporate customers and start communicating these to them.

In addition, corporates are looking to consolidate their cross-border banking relationships, however, they have so far had to make do with a patchwork solution of software, integration and communications links from several different banks, which can be a costly undertaking. As such, the business benefits for corporates to migrate to SEPA instruments have been minimal. The solution may lie in a new banking services model: electronic Full-Service Banking (eFSB).

The concept involves the provision of all possible banking services across a common network through a standard set of interfaces, all of which can be easily integrated into a corporate’s business processes. Instead of many bank-specific software and interfaces, a corporate can take advantage of the bank services it requires across a worldwide network and through one automated gateway.

However, due to current delays and confusion about the timeframes, a full implementation of SEPA is realistically likely to happen between 2011 and 2012. The EPC’s Deputy Secretary General Erik Månsson is fully aware of the fact that ‘SEPA should not be treated as a hobby activity’. As such, questions remain around who will enforce this deadline and what will be the consequences of non-compliance . Ultimately, it might be one for the judges to decide?