IDC EMEA report finds that SEPA fatigue leaves banks in limbo; Research indicates innovation is key to off-setting compliance costs
LONDON, England — JUNE 26, 2008 – SEPA) compliance efforts across Europe has found that 'SEPA fatigue' is starting to emerge across the financial services community, leading to increasing risk of procrastination. According to the new report sponsored by Informatica Corporation (NASDAQ: INFA), the leading independent provider of data integration software and services and by Atos Origin, banks are warned that unless they are innovative and seek to provide value-added services to customers that leverage the SEPA infrastructure, they will fail to generate return on their investment.
The first stage of SEPA went live in January 2008, but European banks must still comply with the Payment Services Directive (PSD) and SEPA Direct Debits (SDDs). One of the biggest challenges faced is dealing with a complex system of 'disparate parts' across multiple formats, which isn't scaleable as the industry becomes increasingly globalised.
Banks therefore need to strike a balance between spending less on processes but at the same time enhancing them. A key enabler to achieving this objective is the effective management of the data that sits across these platforms.
"With all the regulation that banks have had to comply with over the past 10 years it's not surprising that we're seeing the emergence of SEPA fatigue, especially among the middle tier banks which have fewer resources available to adapt their systems to the required changes. It is imperative that the harmonisation of payment systems across Europe is seen as a long-term investment that can be used as a platform to generate future revenue. For example, centralizing payment flows will result in more transparency into customer transactions, which in turn will enable new opportunities to be identified. In order to make this a reality banks must effectively address data challenges. If they can't then their SEPA compliance efforts will be akin to building a two legged stool," said Rachel Hunt, European Banking Research Manager, Financial Insights an IDC company
Whilst SEPA compliance may be daunting and costly to many mid-tier banks, it will have its advantages in enabling them to extend their value add services to customers. The European Commission is currently working on standards for mobile banking as well as common European Electronic Invoicing (EEI) framework, offering banks a long-term strategy for generating ROI. It will be those banks that establish best practices for data integration and data quality across multiple sources that will be best placed to take commercial advantage of these developments.
"At the moment banks are concerned about the drain that processing payments has on their profitability, but with the right platform in place they can reverse the situation and make payments commercially beneficial," said Chris Boorman, chief marketing officer, Informatica. "Those that make SEPA compliance part of their business strategy can leverage market opportunities and eradicate budgetary inefficiencies common with regulatory projects. Additionally, it is the banks that provide the lowest cost service and in the most efficient way that will emerge as the market leaders in the coming years.
Those who fail to invest now risk being priced out of the market."
"Data integration is an obvious area for ensuring the smooth transition of payments, but it shouldn't be considered in isolation. Banks of all sizes have to support a growing number of standards as the industry becomes more international – that means establishing best practices now to minimise the pain at a later date. Also, the financial impact of sub-prime and recent fraud cases highlight the importance of tightening risk management systems to reduce business risk and target fraud," added Boorman.
"Whilst the first stage of SEPA compliance passed relatively unnoticed, the second stage is a huge undertaking for banks and for the mid-tier organisations especially as it is a daunting prospect. Survival in the financial services industry is about the ability to innovate. Those organizations that move away from the traditional model of simply throwing people at a process and look at how they can be automated will undoubtedly be the 'SEPA Winners'," said Joe Edwards, senior vice president, Sales and Marketing , Atos Origin.
The IDC report entitled, Getting The Value Out Of Payment Infrastructures: Leveraging SEPA, is available for download by logging onto: www.informatica.com/info/sepawpq208. The research was conducted during April 2008 and IDC consulted with the majority of financial service organizations across EMEA.
Informatica Corporation (NASDAQ: INFA) is the leading independent provider of enterprise data integration software and services. With Informatica, organizations can gain greater business value by integrating all their information assets from across the enterprise. More than 3,200 companies worldwide rely on Informatica to reduce the cost and expedite the time to address data integration needs of varying complexity and scale. For more information, call +1 650 385 5000 (1 800 653 9871 in the U.S.), or visit www.informatica.com.
About Atos Orgin
Atos Origin is an international information technology services company. Its business is turning client vision into results through the application of Consulting, Systems Integration and Managed Operations. The Company's annual revenue is EUR 5.8 billion and it employs 50,000 professionals in 40 countries. Atos Origin is the Worldwide Information Technology Partner for the Olympic Games and has a client base of international blue-chip companies across all sectors. For more information visit www.atosorigin.com.
About Financial Insights, an IDC Company
Financial Insights provides independent research, custom consulting, and detailed multiclient studies on the technology issues and challenges facing the financial services industry.
Our global research covers topics of strategic importance to corporate and retail banks, insurance carriers, asset management firms, securities and brokerage firms. Our local practices in Asia Pacific, Europe, Latin America and Canada add an in-depth regional viewpoint. Financial Insights, an IDC company, is headquartered in Framingham, Massachusetts, USA.
IDC is a subsidiary of IDG, the world's leading IT media, research, and exposition company.
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