SEPA deadline "unachievable"

Research into the preparedness of banks for complying with the Single Euro Payment Area (SEPA) has found meeting the deadline when it comes into effect next January will be a challenge for many.

SEPA is designed to standardise processes across the European payments industry and create an integrated cross-border environment for banks and their customers.

But the research, sponsored by payment services provider Vocalink, revealed that over half of respondents thought that meeting the January 2008 deadline was unachievable.

It also found exactly half (50 per cent) of the 113 senior executive respondents among the European and global banks, questioned by researcher Finextra during August and September, believe that sending and receiving credit transfers in a standardised way across each of the 31 SEPA country markets will be a challenge. And while 43 per cent said this capability would present no problem, a further six per cent said they would not be able to meet the deadline.

This opinion was further reinforced with 81 per cent of banks believing their customers would not migrate payments to SEPA schemes until 2010 or beyond.

But the implementation of SEPA direct debits was highlighted as a major focus for 35 per cent of banks despite the fact that 44 per cent felt that direct debit mandates would be "difficult to manage".

On a more positive note, the findings did suggest banks are beginning to concentrate on supporting customers' needs who want to make payments across country borders. The majority (54 per cent) cited the ability to convince customers of the importance of moving to SEPA instruments as the most significant issue facing their business.

Many said they were planning to offer customers value added services to encourage customer migration, but also to gain a competitive differentiator over competitors. The most popular of these was the ability to send all payments through a single channel (32 per cent) closely followed by message reformatting (24 per cent).

Martin Wilson, chief marketing officer at VocaLink said: "With SEPA compliance just around the corner, the thought that many European banks do not have a solution for reach is a cause for concern."

He said banks should consider a number of partnering solutions available from the likes of Vocalink and other payment providers to enable them to meet SEPA deadlines.

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