What are the key points that you will be discussing at the upcoming EPCA conference?
My presentation will focus on the impact of new technologies on consumer behavior. These new technologies change the way we live our lives, and create new opportunities, also in payments. These new solutions have the potential to be disruptive. Existing players have to face the classical innovator dilemma. Individual banks – and the payments industry overall – therefore need to address some key questions: should they seek to develop competing solutions, either individually or collectively; can they do so effectively; how should they organise themselves and when should they act?
How can banks make money out of SEPA?
One of the consequences of SEPA is that it will increase competition. Businesses will review their banking relations. For example: SEPA will create new possibilities for cash pooling and account concentration, creating the possibility to decrease the number of bank accounts and increase efficiency. Overall SEPA will have a negative impact on the overall revenue pool in payments and cash management. However, there will be winners and losers. Consequently, it is essential to stop looking at SEPA as a compliance issue. With the SEPA end date approaching, more and more banks are further developing their SEPA strategies. Banks are and should be looking for ways to approach new markets, focus on their strongholds and use SEPA as a trigger to develop more value added services such as e-invoicing and reporting solutions.
From your perspective, the power of profitable innovation will be unleashed by…
Innovation is more than just having a good idea. One of the most challenging parts of innovation is commercialization. Key to commercialization of a new product or service is creating a fertile eco-system that helps to flourish the innovation. Especially in payments a reasonable market share should be reached before a new product can viably exist in the longer run. To create this eco-system, players should cooperate to reach critical mass. This cooperation should focus on using the existing infrastructure and shaping the additional required infrastructure on top of which each individual player can build its own value proposition.
In your opinion, how can banks improve financial operations?
Improving financial operations is a two edged sword, it is definitely about reducing costs but also about increasing benefits. With continued pricing pressure certainly in Europe this is a continuous challenge for all banks. Of course there are many ways to do this in payments and core banking but there are two key words in my views. First of all, complexity reduction. Complexity is one of the main underlying drivers for costs and also hinders banks to be agile and flexible in product development. Simplifying products and services is the starting point for a successful implementation of new less complex operating model. The second key challenge is to take an end to end value chain approach to cost reduction. Too often there is too much focus on the Operations and IT part of the payment value chain.
Will the end date make SEPA happen?
The current time frames are challenging and will ask a significant implementation effort of all stakeholders involved. Personally, I think it is a blessing in disguise. Without an end date migration could take a long time, not only because banks could postpone large scale implementation, but also because clients having no urge to migrate to an unknown (to themselves or their clients) payment product. So the answer to your question is yes. Of course timing will depend on how stringent national regulators will enforce legislation. In the end full SEPA migration will happen as I think it is unlikely that politicians will let banks get away.What will we experience of SEPA in the coming years?
We will see increased competition within the SEPA area, as banks will actively target new customers abroad. Secondly, the creation of new interesting propositions will speed up, both from existing players, but also from new entrants and service providers. Thirdly, wide implementation will create a need to further enhance the product, possibly by further changing the Rulebooks. Last but certainly not least, banks, payment institutions and policy makers will need to think about what is next. How does the world look in the new SEPA world, have we already fully grasped the implications of this change?The directions of development for successful SEPA migration are…
In most European countries the focus of SEPA migration is on banks, government and to a lesser extent on larger corporates. Many surveys show that SMEs and consumers are hardly aware of the upcoming changes (mainly IBAN related). Successful migration can only be reached when the entire community is aligned, allowing businesses to migrate more easily without the need for them to educate their customers. This shows the need for clear and concise communication towards all stakeholders in the payments domain.In its 7th Progress Report on SEPA, the European Central Bank calls on European legislators to take further action to ensure that SEPA is completed successfully. In case SEPA migration is not achieved in a short timeframe, what impact could this have on online payments?
The difficulties that are experienced in migrating to SEPA are increased due to the needed conversion of an existing national payment eco-systems. Online commerce, although rapidly growing, is still in its first phase. If SEPA migration takes longer with insufficient clarity about migration and the end date unnecessary fragmentation of e-payments solutions is likely, a missed opportunity for the Eurozone.
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