Hurry Up and Wait

As the deadline for the single European payments area (SEPA) draws closer, the vendor community is starting to respond to banks' SEPA needs. However, according to executives with ACI Worldwide (Omaha, Neb.), which recently released the ACI Wholesale Payments System for SEPA, many banks still are evaluating their SEPA strategies and systems needs. Further, says Paul Styles, product marketing manager on ACI's wholesale side, banks have not done a good job communicating with their corporate clients to learn their needs in a SEPA world.

Like many industry insiders, ACI believes that financial institutions need to step up their SEPA preparedness, especially when it comes to the business case for implementing the standard. "Banks are split into two camps," explains Styles. "In the smaller camp are the banks that view SEPA as a business opportunity. The larger group includes those who aren't sure what the business case is." Some estimates place the cost of SEPA compliance to banks at at least $9 billion.

However, the opportunities are there, according to Styles. "Even regional banks are beginning to see SEPA as an opportunity for them," he relates. "Geography will no longer be a differentiator -- they see they will be able to compete with the larger multinational banks."

Still, Styles contends, many banks are approaching SEPA simply as a compliance issue and look to get away with the minimum for compliance. "Too many banks are looking to the European Payments Council [EPC] to tell them what to do with SEPA," he says. "The EPC set the framework, but the banks have to figure this out themselves. As a whole, the industry is dragging its feet."

As a result of banks' uncertainty regarding SEPA, he suggests, they have failed to address how the standard will affect their wholesale clients -- a significant issue, according to Styles. "A lot of corporate executives [have said that] not a single one of their many bank relationships contacted them about SEPA yet," Styles explains. "That's quite an indictment against the banks."

And the communication breakdown isn't limited to external channels, either, he adds. "Very few people at the banks' customer-contact level even know what the SEPA acronym stands for," Styles asserts.

Communication Breakdown

This early lack of communication does not bode well for banks, notes Sandra Horn, ACI's lead product manager. When SEPA comes on the scene, payments will become more commoditized, she relates. Therefore, banks have to "get creative in terms of how they offer services in this environment," says Horn. "How can they make their payments service different from the next guy's?" she poses. Communicating the value of their services will play a big role in banks' overall SEPA strategies, Horn explains.

As if banks don't have enough with which to concern themselves, they still must contend with their largely stove-piped IT infrastructure. Silos will continue to be a problem in the SEPA world, says Horn, and banks had better find ways to deal with them.

ACI's SEPA product is designed to eliminate this problem, claims Styles. Avoiding silos is "a key SEPA best practice," he comments. After all, "The principal aim of SEPA is not just cross-border payments, but it is also aimed at improving the efficiency of domestic transactions."