Despite the challenges that the Single Euro Payments Area (Sepa) presents, 79% of European banks admit it is a positive exercise, according to a new survey published by banking system vendor i-flex solutions.
Three quarters of respondents think Sepa will create new business opportunities, from the expansion of business to new geographies to the provision of new SEPA products and services.
Despite these opportunities, banks are still in the early stages of Sepa planning. With the first deadline only two years away, most banks should be well into the design and specification phase. However, the survey found banks are still at the discussion stage and barely nominating payment tsars.
Cost savings are central to these opportunities. Payments already represent a third of banks’ total operational costs, but contribute to only 10% of overall profitability construct and Sepa will drive down revenues further. 71% of surveyed banks highlighted the need for greater straight through processing (STP) and cost efficiencies.
More than 60% of banks are hoping to generate cost savings predominantly through higher STP rates rather than by reducing the cost of maintenance of existing systems. However, more than 20% of respondents foresee no cost savings, which could make the mandatory Sepa spend unsustainable.
Sepa aims to harmonise the payment products and services offered by the banks in the European Union, in terms of format, fee structures and IT platforms for processing transactions. Sepa introduces uniform schemes for all countries in the Eurozone requiring all retail cross-border payments up to EUR50,000 to be treated as national payments.
The research was conducted by Financial Insights, IDC in July/August 2006 across 70 European Union banking institutions.