Last week, the European Commission reminded banks that SEPA was inevitable and that banks should be preparing both to respond to the requirements and to take advantage of the opportunities. However a study released at the same time found that 76% of banks were only doing the minimum necessary.
The energetic Senator Charlie McCreevy, European Commissioner for Internal Market and Services, in a speech to the British Bankers’ Association 10th Annual Supervision Conference, specifically reminded guests that SEPA – the Single Euro Payments Area – was an initiative from the banking industry and it was their intention to establish a genuine harmonised framework for cross-border payments in the EU by 2010. He said “The Commission fully supports this idea. The first pillar of SEPA is the elimination of legal barriers. To ensure this we have proposed the Payment Services Directive.”
The objective of this directive is to increase competition in payments by removing market entry barriers, by harmonising information requirements, and by increasing consumer protection. McCreevy said that the directive is in final stages and that all parties were committed to its adoption in a single reading by the end of the year. Whilst acknowledging the stress on the banking industry, McCreevy noted that the economic benefits would be substantial and that it was crucial that banks develop competitive payment products so users would switch spontaneously from the existing payment instruments.
But a study released by LogicaCMG has found that fewer than half of the European banks surveyed were looking at product and market strategy post-2008 (when the first SEPA facilities are due to be implemented), and only 37% had a strategy to exploit SEPA opportunities. Jerry Norton, director of strategy at LogicaCMG, said “With banks openly admitting that they are doing the minimum to meet the 2008 requirements there is a clear indication that the first deadline is currently detrimental to the overall implementation of SEPA.”
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