Presented at the Bankers Association for Finance and Trade 1st European BanktoBank Forum January 10

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(No Transcript)
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Alfredo Rodríguez
Depository Payments Director BBVA What
does SEPA mean for banks?
Presented at the Bankers Association for
Finance and Trade1st European Bank-to-Bank
ForumJanuary 10 12, 2006Pembroke College,
Oxford University
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The reality of payments in Europe - 1
Revenue mix
Use of cash
Num payments per ind.
Cash/Others
Total
Direct
Indirect
Poland Spain Italy Germany USA Sweden Belgium
Netherlands UK France
98
2
1760
Italy 3,9 1,0 2,9 France 2,1 -0,9 3,0 Spain 1,5 -0
,7 2,2 UK 1,4 -2,0 3,4 Sweden 0,8 0,3 0,5 Belgium
0,2 -0,1 0,3 Germany -0,1 -1,5 1,4 Netherlands -0,
1 -0,7 0,6 Poland -0,7 -0,8 0,1
93
7
1970
93
7
1500
86
14
1470
82
18
2900
82
18
990
78
22
1100
75
25
1400
72
28
1240
71
29
1100
Payment instruments mix
Source of revenue (market segment)
Num of transactions per individual (cash
excluded) 2002
215
161
55
212
77
From customers
70
DE
60
50
IT
Consumers share
FR
ES
40
US
BE
30
SE
PL
NL
UK
20
From corporates
10
25
85
65
45
Customers share
DIVERSITY
Source McKinsey Capgemini
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The reality of payments in Europe - 2
Others
Credit transfers
Cards
Direct debits
Total payment transactions (excluding cash)
Credit transfers
Cards
Direct debits
lt 2
Credit transfers
5
The reality of payments in Europe - 3
Costs distribution within European FIs
100
65 - 60
Clearing costs
15
35 - 40
85
Other coses
Non-payment related costs
Payment related costs
Total costs
Source McKinsey
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SEPA what the authorities say
SEPA is a must
Jean-Claude Trichet, President of the ECB,
Speech at the EBAday Paris, 23 June 2005
The time has come to move forward and press the
accelerator
Charlie McCreevy, European Commisioner for
Internal Market and Services, Speech at the
EUROFI Luxembourg, 10 March 2005
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The Roadmap to SEPA
Design preparation Implementation
deployment Co-existence gradual
migration Programme activities
design

specification
1
implementation
pilots
2
launch
early adopters
?
national migration
programme management, planning, communication,
monitoring
Milestones - SEPA instruments available in
market - Critical mass migrated/SEPA
irreversible subject to the commitment of all
stakeholders
1
2
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SEPA cooperation or competition?
PRODUCT SERVICE LAYER
COMPETITIVE
Client 1
Client 2
BANKS CHOICE
Core and Value Added Services
End to End Standards and Data-Elements
SCHEME LAYER
COOPERATIVE
Bank 2
Bank 1
Scheme Management Business Rules
Practices Standards
SEPA Credit transfers Rulebook
EPC
SEPA Direct debits Rulebook
INFRASTRUCTURE LAYER
Principles for SEPA compliant Clearing
Settlement Mechanisms (PE-ACH Model)
EPC
COOPERATIVE
SEPA Compliant ACH
Bilateral/ Multilateral
Intra- group
PE-ACH
BANKS CHOICE
PARTLY COMPETITIVE PARTLY COOPERATIVE
BANKS CSM CHOICE
PROCESSORS
NETWORKS
COMPETITIVE
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SEPA a changing market
Growing demands from customers
Political Regulatory pressure
Fragmented systems infrastructures
REVENUE COSTS
Dispersed legal framework
New Market players
Insufficient solutions for STP (standards)
?
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SEPA what does it mean for banks?
A NEW OPPORTUNITY FOR SOME?
A NEW (TOUGHER) COMPETITIVE ENVIRONMENT
GROWING CONVERGENCE
IN TRANSACTION FEES
IN ACCOUNT REVENUES
BANKS
Scale
LOWERING COSTS
ADAPTING MARKETING STRATEGIES
Standards
THE NEED TO REACT
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Payment infrastructurescurrent situation
CLS
Local RTGS
TARGET
HIGH VALUE PAYMENTS
EBA EURO1 STEP1
Correspondent banking
Local card processors
Local ACHs
VISA Mastercard
LVP
EBA STEP2
NATIONAL
X-BORDER
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Payment infrastructurestomorrow?
KEY PLAYERS
CLS
TARGET2
HIGH VALUE PAYMENTS
local RTGS
EBA EURO1 STEP1
Correspondent banking
Local ACHs
EBA STEP2d
LVP
VISA Mastercard
INTEROPERABILITY AS A KEY ELEMENT FOR SEPA
NACIONAL
TRANSFRONTERIZO
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SEPA what customers want

• Corporate customers ()
• End-to-end standards ( inc. remittance info)
• Better information reporting services (online,
  single window)
• Communication channels simplified
• More efficiency (clearing, execution, settlement,
  cut-off)
• Retail customers
• Lower price
• Same day value services
• Simplicity and availability (em payments,
  internet)
• More transparency

() (c) Survey 2005, Financial Insights
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SEPA recipe for success

• Stick to the plan (SEPA Roadmap). The complexity
  of the project does not allow last minute orders
  or wish lists.
• Acknowledge customer requirements. The SEPA
  schemes would not take off if the were seen by
  customers as a step back.
• Encourage competition and preserve business
  appetite. The SEPA schemes should provide a much
  needed pan-European standardisation for core
  services without invading the banking competitive
  ground. Competition is the only way to ensure
  first class services to end-customers.
• Facilitate the existence of an economic
  rationale to support the investment efforts that
  the banking industry will have to go through in
  an uncertain business scenario.
• Trust the market forces to evolve the
  infrastructures towards convergence in search of
  efficiency and service quality. Do not reinvent
  the wheel. Interoperability will be provided by
  the use of common SEPA schemes.
• Consistent, well balanced, legal and regulatory
  framework.
• Consistent communication. Share a common view and
  explain it accordingly. That would help managing
  expectations and would remove uncertainties,
  easing the process of designing migration plans
  and making investment decisions.