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Does SEPA matter?

We had a good meeting of the financial services club this week to debate SEPA, and whether it matters.

It was a repeat of last year’s meeting, with Fred Bar of Vocalink and Gary Wright of the SEPA Consultancy putting the case for SEPA opposed once again by Paul Smee of the Payments Council and Simon Bailey of Logica.

This year the debate had moved on a little bit, with the view that SCTs doubling in volumes from just over 5% in 2010 to 10.4% today showed that SEPA was irreversible and moving forward with momentum.

This was countered by the view that the EPC hoped to have SEPA fully in place by 2010 back in 2002, and then irreversible by 2010 in 2005. The reality is that SEPA still has a long way to go.

No way, say the supporters of SEPA. It’s here and you cannot refute it is succeeding, especially now that there is an end-date likely to be implemented for early 2013 for SCTs and 2014 for SDDs.

“Sure, sure”, say the naysayers. You have an end-date, but it’s a totally chaotic transformation when you throw in the fact that you have ISO20022, XML, BIC, IBAN and more as part of this process which is a problem for everyone, particularly those countries that are not in the EU for example.

Get out of here, say the SEPA-leaders, who believe that we are past the point of no return and that debate should be more about how to exploit SEPA as the American banks are moving into this market big time and, if anything, European banks have been slow to exploit the opportunities that SEPA offers.

Nein, state the SEPA-ratists, who note that the vision is lacking and that the machinations of SEPA have been just that: a bureaucratic machine. SEPA needs some excitement if it is to work, they claim.

The debate raged on for a good hour or so, with the audience lobbing in a few points including:

SEPA seems to be key for the banks, but for the customers?

Is there a raison d’etre for SEPA?

Does anyone need it?

Where’s the consumer and corporate requirements?

A couple of points I particularly noted is that SEPA or, more importantly, the PSD is important for corporates as the commercial clients of banks can now register as Payments Institutions (PI) potentially. As a PI, a corporate can then circumvent the bank if they want … an opportunity that some will take in the future they believe.

The other point is that the Euro debate that has raged for the past few months is a key burning platform in the SEPA and PSD debate. Does SEPA matter if the Euro implodes, or moves from a single Euro to a hard Eurozone and a soft Eurozone, whatever that means.

None of these questions are easily answered of course, but the debate is fun to have and, like last year, the final vote of whether this house believes SEPA matters was split firmly down the middle.

The vote was carried against the motion however by the voice of the Chair.

So this year, this house believes that SEPA doesn’t matter.


Because, as the Chair, I think that the Euro matters far more.

The debate right now should be whether the Euro matters and whether it can be maintained.

Once we get through that debate, then SEPA will obviously matter once more, assuming that the debate is won by the Euro supporters of course.


UPDATE – 10th February 2011, 07:55

Just got an interesting note from a friend that reads:

I read your SEPA blog of today and I can see that the progress is slow in most places.

The Finnish market (banks and customers together) decided to put a target end-date for SCTs for 31.12.2010 and a final end-date (banks stop receiving old transactions formats ) for 31.10.2011.

These deadlines got the customers moving.

By the end of 2010 we had close to 50% of all credit transfers in SEPA format from the customers (when it was below 10% in the beginning of the year.

We do not have yet the statistics for January but the growth will probably be in the range of 10-15% more of converted volumes.

By this development Finland has become the largest SEPA-country in the EBA STEP2 ACH-service.

So with a good planning and dedication the conversion can be done in a reasonable timeframe.

You can read more at: http://www.fkl.fi/www/page/fk_www_4065


About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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