SEPA and PSD Progressing, but Liquidity Risk Remains an Issue, Finds Survey

The Financial Services Club (FSC) and Logica have revealed the results of research into the state of play in European payments and the progress of the implementation of the Payment Services Directive (PSD) and the single euro payments area (SEPA). The report surveyed over 360 global bankers, consultants and technologists and covered five key areas. These included the development of the European Union, the impact of the PSD and SEPA, bank-to-corporate relationships, and liquidity risk.

The survey revealed that two-thirds of banking professionals agree that an integrated payments market is either critical or very important to Europe’s future. When it comes to the PSD, 50% of respondents think it has been successful – a 15% increase from 2010. For SEPA, when asked the same question the results are not as positive – only 30% think it has been a success. Banks are also slightly more optimistic on the progress of SEPA – with 70% believing that the SEPA vision will be realised by 2017 compared to 68% last year.

A key issue highlighted by the survey is concern over liquidity risk. While 73% of banks surveyed know their financial exposure in the case of a liquidity event, only 39% were able to do this through the right technology, of which only 17% can do this in real time.

Chris Skinner, founder of the FSC, said: “This is the third year we have run our survey and what is interesting is to see the shift in viewpoint of European payments. In 2009 respondents’ concerns were primarily about the implementation of the PSD. In 2010, there was disillusionment with the whole development of the PSD and SEPA. Now it’s clear that European payments professionals are gradually accepting and adapting to the new ways of processing payments. However new challenges are emerging around corporate payments and liquidity risk.”

Nick Ford, global consulting practice leader for payments, Logica, said: “New regulations require analysis and allocation of liquidity and its risk management to the lines of business that generate liquidity demand. It is therefore essential that liquidity pricing is built into every part of a banks’ business plan including governance, strategy, capital and liquidity management. The combination of increasing regulation and a lack of right automation tools in many banks, makes it easy to see why this is an area of concern for those surveyed.”

Seven out of 10 respondents felt that SEPA was having a positive impact on corporate-to-bank payments processing and 81% found that technology solutions met their requirements, although the majority noted that these developments could be improved.

Ford continued: “SEPA as a whole can boost the efficiency of a corporate firm’s payments processes and it is good to see that the survey has found that will be a positive initiative. The clever corporates though will think longer term to find the right opportunity of how they can find business benefits in SEPA.”


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