What will a post-SEPA world look like?
With the recent news that the Single Euro Payments Area (SEPA)deadline has been pushed back six months, it provides a good opportunity to review the reasons why this might be the case and what we can expect once we get through to the other side, writes Paul Thomalla
With the recent news that the Single Euro Payments Area (SEPA) deadline has been pushed back six months, it provides a good opportunity to review the reasons why this might be the case and what we can expect once we get through to the other side, writes Paul Thomalla
The creation of SEPA is the brainchild of the European Union (EU) and designed to simplify bank transfers across the 28 EU member states, the four members of the European Free Trade Association (EFTA), and Monaco and San Marino. Essentially, SEPA is designed to make it easier for the biggest revenue driver for banks to be carried out more efficiently. On the flipside, it is designed to give multinational corporates greater choice when choosing a bank.
So why the delay? Well, there is one big looming white elephant sitting in the room. The fact that there are individual national, sovereign, central banks each with their own agenda and objectives seems to have been completely overlooked when this was planned.
During the process of implementing SEPA, each of these organisations has tried to have their two pennyworths. The expectations of banks has altered from the original intention of SEPA, causing delays and roadblocks along the way. Banks have been jumping through hoops in one market, only to jump through a whole new set of hoops in another.
Add the fact the relative availability of cash has also hardly acted as a catalyst for banks to get their houses in order. With quantitative easing being used by some governments, it has meant there has been no shortage of cash giving banks leeway when handling big corporate deals. But with quantitative easing set to come to an end and the new SEPA deadline looming, banks will need to get this right in a hurry.
The post-SEPA world is one in which cash is at a premium and big corporations will demand more control over their capital. They will expect greater transparency over where their resources are so they can better plan the flow of their capital across markets. In what position banks will be to deliver this is still up for debate, but what is highly likely is that large institutions will face the nightmare of losing key customers unless they update their systems and processes, and do so soon.