Enhancing the Customer Experience Through a Period of Transformation
Every treasury and finance department in Europe will be going through a period of transformation as the SEPA (Single Euro Payments Area) February 2014 migration deadline approaches. Banks such as Societe Generale have a major role to play in facilitating this transformation; however, as Alain Grugé, Global Head of Cash Management, Societe Generale, discusses with Helen Sanders, Editor, the bank is also undertaking an internal transformation which will enhance its ability to meet the pan-European needs of its customers.
How far has SEPA migration progressed amongst your customer base so far?
In France, we see a difference between small & medium-sized enterprises (SMEs) and larger corporations. SMEs typically still have the migration process ahead of them, while nearly half of our larger customers have at least started to migrate to SEPA Credit Transfers (SCT). Although total market volumes of SCT are increasing in France, a substantial portion of this is driven by the public sector, which has now migrated high volume payments such as payroll and social security payments to SCT.
In most cases, companies have yet to actively embark on a SEPA Direct Debits (SDD) project. SDD still amounts to less than 5% of the total direct debit volume in France, so there is still a substantial journey ahead. Some companies that have large volumes of direct debits, such as telecoms and utilities, have started to plan their migration projects but these are not yet well-advanced.
Although the advantages of standardised payment instruments are clear, such as the ability to rationalise banking partners, centralise processes and simplify cash management structures, migration from existing domestic instruments also brings challenges and complexities, particularly for direct debit migration. For domestic companies that do not use direct debits, the migration process should be straightforward, but larger companies that have subsidiaries in multiple countries have more complexities with which to contend.
Bearing in mind the approaching end dates, how should companies be approaching their migration projects?
Generally, corporates have started very late in the SEPA migration plans, particularly as it has taken time to resolve remaining uncertainties. Unless a company has straightforward payment and collection activities and a limited number of affected systems, many larger companies will not now have time to fulfill the potential that SEPA offers by February 2014. Consequently, these companies should now be considering a phased approach to migration, focusing initially on compliance, with a second phase to optimise payment and collection processes and rationalise cash management across participating countries. While this approach may be more costly or resource-intensive than pursuing a single project, it is important to balance this against possible risk of non-compliance.
What are the typical challenges of a SEPA migration and how is Societe Generale helping customers to overcome these challenges?
As we discussed earlier, the degree of complexity of a SEPA migration will obviously vary according to the size, reach and internal cohesion within each company. The degree of centralisation and standardisation that already exists will also influence the project significantly; for example, where subsidiaries have their own systems, processes and banking relationships, it becomes more difficult to align the migration project. Furthermore, although SEPA is intended to standardise payment and collection formats across the Eurozone, there is inevitably a degree of customisation occurring in each country, which adds complexity to a migration project across borders.