Swift will provide the messaging platform, testing solutions, services and the organisational infrastructure to support this initiative in coordination with the European Payments Council (EPC) and banks.
Major banks across Europe, as well EBA Clearing have joined the programme. Corporates will also be able to participate. Testing will be organised through ACHs, bilateral clearing and other clearing and settlement mechanisms across Europe.
The testing will help ensure that standard procedures are used across the area, irrespective of clearing arrangements, and generate results that allow for consistent interpretation by all parties.
But beyond the large pro-active banks involved in the testing, there is concern that many in the industry are not prepared at all. Finextra's Sibos delegate bloggers (Sibos blogs) report that while the audience poll for the Sepa session at Sibos yesterday showed only 12% of banks have allocated resources for 2007 activities, three quarters of the audience nonetheless expect to be ready by the deadline.
By contrast, a similar survey conducted prior to Sibos by Coleman Parkes Research on behalf of Logica CMG revealed a lack of planning for the migration of national payments to Sepa instruments within the banks. According to that survey less than a third (30%) have a full plan in place and in operation for the migration of clients.
The organisations who are preparing by participating in the Swift compliance testing hope it will encourage strict compliance with Sepa core mandatory standards as defined by the EPC and foster interoperability across Europe by avoiding the emergence of variances to the Sepa ISO 20022 standard. The banks involved are also hoping to reduce the price and complexity of Sepa implementation and achieve faster migration.
Banks signed up to the programme are: ABN AMRO, Bank of America, Banco Bilbao, Vizcaya Argentaria (BBVA), Banco Santander Central Hispano, Caisse Nationale des Caisses d’Epargne, Commerzbank, Crédit Mutuel – CIC, Deutsche Bank, Fortis, ING, JPMorgan Chase, Natexis Banques Populaires, Nordea, SANPAOLOIMI, SEB, Société Générale and UBS.
"With this testing we, together with other important market players, have the means to ensure that the new Sepa formats will work throughout the Sepa market place without country restrictions," comments Wolfgang Gaertner, CIO, Deutsche Bank.
The giant German bank is developing its own Sepa platform for the mass payments business as well as enhancing its cash management range with new products for payments transactions to ensure Sepa compliance by January 2008.
Werner Steinmüller, head of global transaction banking at Deutsche Bank, remarks: "Our analyses have shown that Sepa offers long-term potential, e.g. for payment factories and platform reduction. In order to use this to the fullest we are investing substantially in technology, processes and products – both for corporates and financial institutions."
And Deutsche Bank is not alone in making a significant investment. The top 100 banks in Europe are projected to spend more than EUR3 billion to comply with EU requirements for Sepa, according to a recent survey conducted by Accenture.