Understand how Sepa affects your business – today on euromoney.com
This week the Euro Single Payments Area finally comes into force. It promises to change forever the way banks in Europe are able to do business. <br><br> But many people are still not sure what changes Sepa brings. <br><br> Over the past year and more, subscribers to Euromoney have been able to keep ahead of the game with our regular features and dicsussions.
Euromoney February 2008
Unprecedented co-operation between European banks has, at last, created a single euro payments area. It will transform the cash management business and possibly the whole banking industry.
Cash management debate: The tricky path to standardization
The global credit crunch has underlined to banks the importance of cash management and transaction banking as core businesses, given that they provide steady revenues. Elsewhere in the market the full introduction of the Single Euro Payments Area, with its resultant benefits for banks and their corporate clients, is still some years away.
Shared service centres or payment factories? Corporates have to choose which system works best for them. There is no one size that fits all, while good working partnerships with banks are as important as ever.
The optimization of working capital is the treasurer’s crucial concern – all the more so as rates rise and credit conditions tighten. Financing issues within supply chains are key, and the increasing complexities of supplier-buyer relationships are creating new credit and payment pressures.
Corporate treasurers are keeping a close eye on the new regulations that will impact on cash management. The Payment Services Directive is due this autumn – another step forward – yet the timetable for Sepa is still vague. Even identifying the benefits of the changes is a matter of hot debate.
The regulatory framework of Europe’s single payments system is effectively in place. But the details of implementation by banks and corporates are still a matter of debate.
Corporate treasury bears the brunt of regulatory and technological change, and those changes are accelerating. At the same time, demands for performance increase, and it’s the banks who have to deliver.
There has been no relief from the pressures that last year’s annual cash management poll detected: globalization, declining margins and intensified competition. Smaller banks face a choice between expanding to compete or forming difficult-to-implement partnerships. Some might soon begin to question whether all the effort is worthwhile.
Europe may have one currency, but it still has many payment systems. What will be the impact of SEPA on banks and their clients? What opportunities exist in emerging Europe? Leading cash management professionals debate the confusion over standardization and the pros and cons of payment factories.
Sustained competition, falling margins and regulatory pressures mean that the world of cash management and payments is heading towards an inflection point. The EU's Single Euro Payments Area project is adding yet more fuel to the fire that will force banks to re-evaluate their strategies.