Lack of respect for payments business exposed by SEPA

It is axiomatic that banks have traditionally had problems in measuring their payments business and the value it brings to their bottom line. Are payments just a means to securing a corporate’s DDA or current account? Are they merely an adjunct to credit relationships? Or do they in fact have an intrinsic value which could do far more than adding a marginal improvement to the bottom line?

Given that very few banks are able to provide a P&L for their payments line of business, you could be forgiven for thinking that payments do not command the respect that they should within the banks. If we accept that thesis, it could go a long way to explaining why the banks are often accused of not listening to their corporate customers about their needs in payments, why non-banks often seem to invest more heavily in the payments business, and why it seems so painful to get SEPA up and running as it could and should.

Following the recent turmoil in the financial markets, it was claimed that transaction banking was back in the limelight, providing a steady and reliable revenue stream, albeit not spectacular. One would hope that was true but there seems to be little evidence of it when looking at the progress with SEPA.

Let’s show some respect to payments, acknowledge the potential power of the payments business, and finally deliver a SEPA we can all be proud of.