SEPA is due to become a full-blown regulatory event once the end-dates are set by legislation. The first reaction to any regulatory change is generally that of ‘response’ – dealing with any required change. And that is often the minimum to achieve compliance.

Yet this is set against a background of revenue challenges; as the Boston Consulting Group has identified (“Banks must retool payments businesses as revenues dip” – Finextra 08.02.11) global payments revenues - which typically constitute a third to a half of most banks' total revenues - fell at a compound annual rate of seven per cent from the end of 2008 through to 2010.

That makes it more important than ever for financial institutions to move towards easier, cheaper, more efficient and more effective payments. As the Boston Consulting Group reports: “In Western Europe, given its highly evolved infrastructure, the focus will be on refining operating models”. However until recently, holistic thinking about payments platforms was difficult. Payments businesses were organized in functional silos, each with their own requirements, issues and approaches. The silo approach may have been inevitable in the past, given how payments types developed, but it has blinded businesses to the overall value of their combined systems.

SEPA is the ideal ‘market event’ to enable banks to justify action and seize the opportunity to refine their operating model for payments. ‘Response’ is not enough – a strategic approach to transaction banking has to be the way forward. No-one said it would be easy but now is the time to act.