29 March 2012

EPC: Get ready for SEPA by February 2014 – How to choose the right IT strategy

The European Union (EU) ‘Regulation establishing technical and business requirements for credit transfers and direct debits in euro' defines 1 February 2014 as the deadline in the euro area for compliance with the core provisions of this Regulation. Effectively, this means that as of this date, existing national euro credit transfer and direct debit schemes will be replaced by SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD). Project managers, who have already concluded the migration exercise unanimously recommend that organisations which still have to adapt systems and operations to the SEPA schemes and technical standards become active immediately.

With regard to the adaptation of IT systems, project managers should consider whether to:

• adapt the existing IT architecture using conversion services;
• build new systems;
• coordinate IT adaptation in house or outsource;
• look beyond SEPA requirements and consider, in addition, initiatives such as e-invoicing, e-signatures, authentication of bank infrastructures and third party services, e-procurement and mobile payment services, for example.

The experience of early movers on the demand side demonstrates that choosing the best approach is subject to the specific situation of individual business and public entities. An important factor in the decision-making process is the current technical state of systems. In addition, interdependencies with systems of business partners must be analysed to ensure continued compatibility.

Stefan Scheidgen, Head of Cash Management and Accounting at Deutsche Post Pension Service Business Division, points out: "IT changes are needed to get master data and payment data streams SEPA ready - that is what everybody plans for. Other IT changes are required due to the implementation of migration tools, temporary converter solutions, changes related to mandate management and pre-notifications under the SDD Schemes and changes of interfaces in processes. The scale of IT investment mainly depends on the existing systems landscape. The age of the systems and capabilities need to be considered. In our experience, even mainframe applications can be SEPA ready, while occasionally applications with more up-to-date technology might need some shared converting support. Change requirements for business processes also vary by industry and degree of automation. If you need to synchronise several external service providers, the picture could be very different than in an environment where you do not outsource. This huge regulatory change could also be an option to rethink and consolidate some of the investment requirements fully driven by regulatory changes."

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