Friday, September 12, 2008
It’s fair to say that the SEPA Credit Transfer go-live in January this year has been something of a non-event. SCTs have not taken off and volumes remain low. The main problem, in my view, is that corporates have no incentive or business case to move from their existing payment instruments to the new systems and formats required under SEPA. Added to this issue is the fact that there is, as yet, no end date for the legacy instruments.
There are two parts to a possible solution: firstly, banks need to collaborate with each other more if SEPA is to be a success. And I don’t just mean the élite, market-leading banks – a broader church is required. In fact, SEPA to one side, most industry initiatives, and the UK’s Faster Payments is a good example, would benefit from greater bank-to-bank collaboration. Secondly, an ‘external’ body could help to make SEPA a more attractive proposition for corporates. Could that body be SWIFT ? SWIFT themselves see the co-operative as “the catalyst that brings the financial community together to work collaboratively to shape market practice, define standards and consider solutions to issues of mutual interest”.
Banks are currently dictating the agenda when it comes to SEPA which means that corporates (and consumers) are not necessarily the first priority. However, SWIFT could play a role in helping the banking industry to develop a standardised approach to the additional optional services required to encourage corporate migration to SEPA. Such an approach would also help to avoid the so-called ‘mini-SEPA’ (where significant regional or country-specific variations exist) which is dreaded by the regulators.
If given the opportunity, SWIFT could develop and promote industry-wide standards and market practices, including a common e-invoicing standard, on top of the new standard SEPA payment instruments. This would help to deliver end-to-end straight-through-processing (STP) for corporates. SWIFT’s standards are also global, so the benefits would extend beyond SEPA.
SEPA is a welcome development within the industry and should ultimately make the lives of banks, corporates and consumers easier. However, in order to fulfil its potential, it has become clear that a body, such as SWIFT, needs to intervene to ensure that SEPA delivers on its promises. For those that remember, the Heathrow Group stepped in to an industry vacuum some years ago – perhaps it’s time for SWIFT to do the same. This SIBOS could just be the moment to get the ball rolling . . .
Product Marketing Manager - Wholesale Payments