After years of speculation, this week in Osaka we finally appear to have a SIBOS with a SEPA conversation worth having. With the date for compliance across the Eurozone now set for February 2014, we are beginning to see a move by corporates to start to adopt
SEPA standards.
The business case for migrating ahead of the 2014 date has always been a tough one, ranging from pure compliance by some corporates, to others needing to invest heavily in their own treasury operations and technology. With the tough times that we are all facing,
spending money on a compliance project that some see as a backward step for their payments processing was always going to be a difficult request.
Now, particularly for the enterprise, meeting the deadline could be a significant challenge. February 2014 is approaching fast and sure enough many corporations will not be able to fully leverage the benefits of SEPA because they simply have too much to change
to support the technical message standards. So we are left with many having to take a tactical approach to SEPA, rather than take the strategic view.
Which is, of course, exactly what the banks did.
As of 2014, one of the key compliance requirements stipulates that companies must provide payment data to financial institutions in XML format. The problem being is that corporations are not currently using this standard, with most not even having XML present.
Rather they are sticking with the ‘legacy’ formats which have worked fine for them for years. A SEPA guidance document published by the European Banking Federation’s Payments Regulatory Expert Group in September clarified that a translation service can be
deployed, with the conversion taking place from the customer legacy format to the new XML standards.
However, this will only be permitted until 2016, after which corporations must have completed their projects to provide XML conversions themselves. The banks have taken 10 years to get this far, but effectively we’re only allowing the hundreds of thousands
of corporations around Europe just 3-4 years.
Banks can finally add a service to SEPA that customers want to buy, and sure enough banks are now busy creating front-end translation hubs to support this customer demand. But there’s another problem - it’s only a short term fix. With banks keen to offer this
service, and customers seemingly keen to implement this strategy, there appears to be little reason why this XML translation cannot remain as a longer term solution.
Regardless, many have gambled on delaying SEPA compliance for too long, and there is little doubt that with less than 18 months until the deadline it will remain as one of the key discussions at this week’s SIBOS.