If Bankers are from Mars, Are Corporates from Venus?
As you may gather from some of my recent posts, it’s the speaking season. This post is the third in a row about insights and observations from recent speaking engagements. Whilst the core of being an analyst is about writing, getting out and talking to people is equally important, and equally as satisfying.
This time the occasion was to celebrate the opening of the new Dutch office for Clear2Pay.They had invited me to speak on the topic of SEPA, and whether banks and corporates were divided or united on its future. Generally my speaking engagements are either mainly bankers or mainly corporates, but this time there was an almost 50:50 split. I won’t replay the presentation here, but it is worth just highlighting a few key points.
I jokingly made reference to the headline of this blog, and got a few wry smiles. To make the point though more clearly, I used the opportunity to do some more informal polls of the audience and the results were startling. But perhaps the most surprising was when asked who would benefit from SEPA. Whilst I expected the corporates to say bankers, the 2 groups were actually united – they both almost universally believed that no-one would benefit from SEPA.
My presentation was making the case for SEPA. It drew parallels to the role that canals and railways played as the infrastructure required to accelerate the Industrial Revolution. SEPA is the equivalent infrastructure required to accelerate a digital and data based future for banking and payments, and ultimately, business in Europe. Once upon a time payments were really defined by the networks they ran over. Then the industry moved to a point the commonality between payment types were more prominent (the move to “a payment is a payment is a payment”).We’re now at a stage where a payment is increasingly defined by the data it carries, and focusing on enhancing how that data can utilized.
Payments is now as much about what it enables and supports, and that's what SEPA has built with in mind. The example I used was e-invoicing, and the potential savings that could be gained. Almost everyone in the audience underestimated these savings by a factor of at least 10. The best estimates put the figure at around €240bn, of which the banks and corporates were the key beneficiaries. Yet for many in the room, this was news and eyeopening.
Its probably not surprising then that I won the day, with the final vote of the evening showing almost everyone now believed that banks and corporates would be the key beneficiaries from SEPA.
This event serves to highlight some alarming deficiencies in understanding what SEPA enables, even at this late stage. It’s easy to point the finger at the banks at not educating their clients better. In part, this is probably because banks want to have the whole answer first, and that’s still not possible. But equally, I suspect that it also means that corporates are less engaged with their banks than they ought to be. It is telling in that the latest SEPA corporate survey, only 1/3rd of the respondents were getting information on SEPA from their bank. Banks may not be the largest supplier to a corporate, but they are probably one of the most critical. Engaging their bank in dialogue is the minimum that a corporate should be doing. However the best way to ensure that the banks are delivering the services that they require is to tell them.
Corporates may not have been involved in the inception of SEPA, but they can be part of it’s future, especially as in reality they are paying for it. SEPA is a once in a lifetime opportunity to create the right foundations for the future. How successful they are is entirely down to ALL the participants.