Finland’s Successful Migration to SEPA Credit Transfers

Finland is one of the forerunners in the single euro payments area (SEPA) migration. It successfully migrated to SEPA in credit transfers already by the end of October 2011. Domestic credit transfers have become SEPA credit transfers and legacy domestic payment file standards have been replaced by the ISO 20022 standard. By the end date altogether 90% of companies had concluded the migration. The banks have temporary solutions with the remaining 10%.

Several factors contributed to the successful migration: early start for the process, readiness to accept common standard solutions and open communication.

“The Finnish community has now gone through the migration and is waiting for other communities, banks and corporations to complete. Of course the limited use of direct debits allowed us to concentrate on credit transfers. We can focus on the SDD [SEPA Direct Debits] and advance e-invoicing services in the next phases. For international SEPA transactions, we now need to identify areas causing pains for traffic from or to other SEPA countries,” said Nordea’s SEPA expert and senior vice president (SVP) Erkki Poutiainen.

Inkeri Tolvanen, project manager for the national SEPA migration project at Federation of Finnish Financial Services (FFFS), stresses also the cost savings. “A short transition period to SEPA means also cost savings to all parties, as the need to maintain both old and new standards is limited,” Tolvanen states.

Readiness to Common Standards a Success Factor

The migration process started early in Finland – in the mid-2000s. The first national migration plan was created in 2008 setting the end date to 2010. Due to challenges in technical implementation from both the banks’ and companies’ side, the end date was set for the end of October 2011.

The national SEPA migration project was organised at the FFFS. Tolvanen explains that all banks that are active in domestic payment traffic in Finland and members of the FFFS and therefore worked together in the migration project.

According to Poutiainen, the breakthrough in migration was led by the large public administration entities in 2010. However, the real mass migration took place during 2011.

Finland’s readiness to common standard solutions and multi-bank standards was one of the key success factors in addition to early start. “Moving into global standards was regarded by many to balance with benefits of the cost-side of investing in a change. Also we saw many corporations to connect the SEPA changes into much more profound process redesign projects where wider-range of benefits could be combined to same change effort,” says Poutiainen.

Tolvanen also stresses the importance of communications in succeeding with the migration: “Communication has proved to be an important key to success. The migration has required lots of work and dialogue between the banks, banking software vendors and the corporate sector. National stakeholder forum has played a major role in this dialogue.”

Challenges with the Schedule

The process did not proceed merely smoothly. SEPA changes were initially seen as mainly compliance changes with minimum approach, and few banks really invested in a total infrastructure change.

“It was easier to agree on contents than implementing the changes within the same time schedules. This was a disappointment to multi-banking customers and software providers. Also some process-related differences in details caused similar problems,” Poutiainen says.

Facilitating the Process

The migration would have not succeeded without supporting vendor companies. “Banking software providers and some integrator service providers were proactive, while many ERP [enterprise resource planning] providers came in quite late with their SEPA versions. The support facilities for testing, provided by companies such as XMLdation, were extremely helpful,” Poutiainen says.

According to Tolvanen, it was essential for bigger corporations to have enough detailed information of the change for their own projects, and that their ERP vendors and bank connection software providers implemented the necessary changes in time.

“It was also crucial that necessary support was available from both their bank and the software providers. For small companies it was important to make the change to SEPA payments as simple and easy as possible,” Tolvanen describes.

XMLdation is specialised in testing payment-related XML. Chief executive officer (CEO) Juha Keski-Nisula stresses the importance preparation. The company helped its customers in multiple ways. One important tool has been the wiki database, which XMLdation has offered to its customers.

”Testing is very important in processes like migration to the SEPA. Even small errors can ruin the entire process. When the testing and training are done properly, this speeds up the projects and brings cost savings,” Keski-Nisula says.

Keski-Nisula emphasises that testing should be seen as a continuous process, not a one-time event. From the business point-of-view Keski-Nisula sees tremendous possibilities: ”SEPA is only one part of a larger XML revolution. Changes in the technical standards will open an entirely new set of opportunities for ERP vendors.”

Figure 1: SEPA: Part of a Larger XML Revolution





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