The single euro payments area (Sepa) initiative was something so burdensome it took longer than planned to implement, but after delays transaction banks and their corporate clients stand to benefit from this payments regulation.
"Sepa was the big, industry-wide event this year," says John Gibbons, head of treasury services for EMEA at JPMorgan. "The banks had to be prepared for it, and their corporate clients had a lot of work to do to ensure they understood and complied with the changing landscape.
The challenge now is to keep the momentum going, as this first phase of implementation is only the start
"2013 was the year of questioning regulation, what form it would take and trying to understand it. 2014 was the year of implementation. As the year progressed there was a lot more pro-activity and thinking about what we could be doing next.”
"Sepa readiness was at the forefront of everyone’s minds at the beginning of 2014," she says. "Since Sepa has been introduced, European organizations have moved on from their focus on simply being compliant to focusing on how centralizing their European treasury operations can realize cost savings, help them achieve economies of scale, improve transparency and provide them with better data."
These benefits might not have been immediately obvious to companies, but most are now benefiting from them. And part of that has to do with how Sepa helped bring about the much-needed modernization of the payments systems used by banks and their corporate clients, says Peter Jameson,co-head of product management and head of trade, GTS EMEA, at Bank of America Merrill Lynch (BAML).
"This year there was the big achievement of getting the legacy systems shut down," he says. "This seems to have been somewhat underplayed in the market. The challenge now is to keep the momentum going, as this first phase of implementation is only the start."
Scope to evolve
The standardized Sepa payments platform still has plenty of scope to evolve, but the question now is what can corporate clients do to take advantage of the new way of operating.
Ernst Ohmayer, UniCredit
Ernst Ohmayer, co-head of global transaction banking at UniCredit, says: “Sepa is a game-changer for corporate treasurers who need to carefully plan for migration and consider multiple factors, such as IT and customer communications, but also face a golden opportunity to review monitoring and reporting, and find further synergies within their operations.”
The banking community is also looking to build out from the platform's foundations.
Matthew Davies, co-head of product management at BAML, says: “The next evolution will be receivables on behalf of. Sepa is an enabler for this. We have spent a huge amount of time talking to clients this year about the next steps in the process.”
Receivables on behalf of enables corporates to change all of their various payments into domestic payments via local bank accounts from one central location. Sepa has set the foundations for this, as it allows corporates to reduce the number of accounts they hold across Europe to make payments from one location.