The US-based research house says the $10 billion spend is over and above the approximately US$6 billion per year concurrent spending by banks on European payments infrastructures.

TowerGroup analysts believe that the high levels of investment required, combined with the consequent reductions in revenue achieved, will deter Euro area banks from voluntarily meeting the 2010 Sepa deadline.

David Medeiros, director of the global payments research service at TowerGroup, says: "European banks will be reluctant to invest in the pan-European payments vision without a regulatory mandate."

Challenges to unifying the overall payments process range from relatively straightforward and tactical (such as establishing specifications for a pan-European 'International Bank Account Number') to organisationally and technologically complex and strategic (such as the decision whether to replace entirely, modify and integrate, or simply interlink the dozens of existing nation-specific payment clearing and settlement infrastructures).

Medeiros believes the changes required will have a broad impact on the structure and size of the banking industry across the region: "Those banks that have the scale and scope to benefit are likely to seize the advantage from smaller banks that lack either the resources or foresight to plan for developments toward a homogenised European payments environment."