Creating order out of chaos: Does the new market landscape created by the banking crisis strengthen the case for SEPA?

Abstract

The global banking crisis has diverted attention from the Single Euro Payments Area (SEPA). So, is SEPA still relevant? The original SEPA vision of building a prosperous Europe, based on efficiency and competition is more valid than ever. The turmoil within financial services has created an uneven playing field, and there are winners and losers throughout European banking. Banks that invested early in SEPA have moved ahead and gained competitive advantage; late starters have fallen behind in SEPA readiness. But the arrival of SEPA provides the opportunity for all banks to rethink their business models; it offers a new dawn for the role that payments can play in European banking. On the face of it, the move to SEPA has been slow and uptake modest. But the legal framework is in place, and infrastructures have been built, though many remain underused. A detailed look at progress to date, however, suggests that the SEPA processing market is more advanced than many people realise. In this regard, payments processing is pre-empting the arrival of SEPA. What is urgently needed is an end date to force the pace. The worst-case scen­ario is a prolonged period of expensive dual running where both SEPA and legacy payment instruments must be supported. The implementation of SEPA is not a panacea for all Europe’s banking ills, but it does present an opportunity for banks to do things differently. SEPA has the potential to transform all aspects of the European payments infrastructure, including its speed, se­curity and service. Banks can adopt a fresh approach that includes new business models, partnerships and marketing channels.