Paul Styles, Product Marketing Manager for Wholesale Payments at ACI Worldwide discusses the challenges that lie ahead for the SEPA initative.

Anyone with an interest in payments will be keeping a close eye on Europe, watching how the world's first cross-border, standardised payment instruments fare. However, as we've known for some time, things are not quite going to plan. In fact, an article in the European Payment Council's (EPC) latest newsletter underlines the potential plight of the SEPA initiative: ultimately that we're in danger of ending up with a politically-driven mess.

At Sibos 2008, I blogged that to achieve success, a third party body needed to step in to oversee the SEPA project to ensure that the needs of all the stakeholders would be addressed. Almost two years on, what this newsletter highlights more than ever is that SEPA is a huge and complex undertaking which still lacks a that central project manager. And of equal concern is that there is still no agreed end-date by which the legacy payment instruments would be withdrawn.

The key factor that has been missing from the start is the engagement of all stakeholders. But who can bring these disparate parties together? The only feasible option at this stage is the SEPA Council that met for the first time in June 2010. This new body is likely to bear the responsibility of representing the various stakeholders, but we are yet to see any concrete measures or progress in that direction. SEPA can and will deliver huge benefits to all parties, but progress has been painfully slow to date.

While the industry looks for a SEPA champion, Europe's banks should not use this lack of direction as an excuse to rest on their laurels when it comes to modernising their payments infrastructure. Migrating to SEPA has involved a certain amount of investment for banks in their payments systems but more is required if they are to achieve the next generation of systems where agility is the key.

Integrated systems that handle payments from any channel and from any scheme, including SEPA, from start to finish, and with no redundancy of technology, or duplication of processes, is the nirvana for payments technology. Such agile systems will enable financial institutions to manage transactions quickly and effectively, with a decreased need for manual intervention and costly interfaces between different systems. As soon as financial institutions start to evolve their payments technology, they will start to see the benefits and will be able to pass them on to customers.

The focus on payments systems and efficiency, arguably driven in large part by the introduction of SEPA, can only be a positive step both for financial institutions and their customers. Let's just hope that Europe's current challenges in seeing SEPA through do not discourage European banks and those in other regions from striving for a more integrated and standardised payments strategy.

Paul joined Midland Bank International in 1974, serving in UK, Belgium and Spain. He joined Banco Santander, London, in 1987, and in 1989 moved to Madrid opening a new office for National Data Corporation, a cash management/electronic banking company.

In 1991, still in Madrid, he joined Banco Exterior-Argentaria. Returning to London in 1995, Paul joined Crédit Lyonnais UK as Head, Correspondent Banking and Head, Electronic Banking, positions held simultaneously. Whilst with Crédit Lyonnais, Paul fulfilled numerous other responsibilities including Director of CHAPS.