Going Global with SEPA
In this month’s Executive Interview, we are delighted to feature Dr Ernst Ohmayer of UniCredit. In addition to sharing his expertise on SEPA, Dr Ohmayer, in conversation with Helen Sanders, argues that banks’ and corporations’ investment in SEPA has far wider implications than simply the euro payments area.
Why is SEPA such an important topic for UniCredit?
SEPA is important for every company doing business in Europe, and we have been proactive over a number of years both to prepare our own systems and processes for SEPA migration, and to encourage our customers to do the same. Today, with the end dates for national formats now defined as February 2014, the situation is clear, and corporates can no longer delay making their preparations. However, while the need for SEPA migration within the euro payments area is well-publicised, the issues and opportunities relating to non-euro payments are less so, as I will come on to shortly.
What trends are you seeing with respect to SEPA migration?
While there were a number of large multinational corporations that were early adopters of SEPA payment instruments, the majority of corporates have not yet migrated from national payment instruments to SEPA. Since the end dates for national payment formats were set, however, we are undoubtedly witnessing an acceleration in SEPA migration. We have spent a lot of time talking to customers and helping them to understand and overcome the issues associated with migration, but some uncertainties still remained. With market practices now more clearly defined, they are in a position to start their projects.
What particular migration challenges would you highlight?
Many companies do not necessarily appreciate that there are process changes associated with SEPA in addition to technical or format changes. For example, the mandate process for SEPA Direct Debits (SDD) is different from the way in which mandates are managed under most national schemes. In addition, transitioning may involve interacting with a large number of customers with which direct debit mandates are in place, not simply the bank that provides direct debit services.
At UniCredit, we are actively supporting our customers’ migration projects, but also making it easier to comply with SEPA. We are doing this through our EuropeanGate, which enables customers to present information in a wide variety of formats through a single entry point, and we then deal with the relevant conversion and routing on their behalf. This makes the transition process far easier and less disruptive to customers’ internal systems, and we are seeing significant demand for this service.
What project outcomes have been achieved by your customers who have already migrated to SEPA?
Early adopters of SEPA used the opportunity of harmonised payments to optimise their cash and liquidity management in Europe, including implementing or updating their in-house banking arrangements, standardising formats and simplifying account structures. However, with the end date approaching rapidly, most companies migrating to SEPA now will not have time to derive additional value beyond SEPA compliance. Consequently, the value of standardisation and harmonisation for these companies is likely to come afterwards. In addition, banks are already thinking about how a harmonised payments landscape enables them to offer new products and services beyond those that are already in existence, which will in turn offer additional value to corporate customers.
You mention the issue of non-euro payments. What were you referring to?
The current SEPA Rulebooks regulate the format of payment messages between banks. While these also provide a recommendation for bank-to-corporate communication, this is not mandatory. To resolve this uncertainty, a number of individual countries, such as Germany and Austria, have established working groups, but these initiatives are potentially dangerous by deviating from the concept of harmonisation at a pan-European level.