The End or The Begining of A New Chapter?

So. Now we know. February 1st 2014 has been negotiated as the deadline for the end of domestic, legacy payment schemes in euro countries. It’s sometimes erroneously referred to as the SEPA end date, but in reality it’s the start date. The end referred to is the end of the migration to SEPA. So where does this leave us? Well, some of the reports mistakenly said that the date is fixed. The actual vote on the regulation doesn’t take place until sometime in Feb 2012. This date is the one that will be included in the draft of the regulation that will be voted upon. So highly likely (98%+), but by no means guaranteed – as we’ve seen in the last few drafts, last minute changes are not uncommon. As discussed in recent reports on SEPA, (SEPA Redux: Understanding How We Got Here), the date may see the final leg of the project, but for many, will cause a great deal of challenges. Some banks will undoubtedly struggle to make the deadline in terms of internal systems. Some elements are still unclear, such as that surrounding direct debit mandates. The largest unknown remains the corporates though. In the European Business Test Panel SEPA Survey 2011, undertaken in Q1 2011, some surprising results emerged. The sample was considered to representative of the make-up of the European business landscape. 24% of those surveyed had not heard of SEPA at all. Of the remaining group, 65% felt they had been under-informed about SEPA, with 46% feeling that they still were lacking in sufficient detail. This then is not an information gap but chasm, and one that needs to be bridged rapidly, as the planning for the conversion needs to need to take place as soon as possible. Experience from other large scale migrations such as that in the UK to a new communications protocol, BACSTEL-IP, shows that even with forward planning, and a 2 year window for migration, over two thirds migrated in the final three months and a number of significant companies missed the deadline altogether. With other elements in the draft regulation requiring changes by the corporates as well (such as the requirement for bank-to-corporate communications to be in ISO20022), the new SEPA challenge is somewhat different. The success of SEPA is in the hands of the corporate yet we’ve seen that they know least, and nor have they been involved in its design. We may have an end-date, but the story is far from over.