ECB Says Innovators to Gain From SEPA
Banks who embrace new technologies, create innovative businesses and provide additional services are likely to gain most from SEPA, says a report from the European Central Bank (ECB).
The August 2007 report by Heiko Schmiedel, ôThe Economic Impact of the Single Euro Payments Areaö, is based on a survey of 11 major pan-European banks. On the positive side, banks told the ECB they expect to gain under SEPA from greater economies of scale and new business opportunities, for example from the use of electronic invoices. They also expect to increase profits by replacing cash and checks with direct debits (recurring payments) and by increasing the use of remote banking channels, the report says. On the negative side, banks will have to bear the cost of implementing new payment systems, which, according to industry analysts, average between 5.2 and 7.7 billion Euros (US$7.06 billion to US$10.45 billion). Bank profits will also be eroded by increased competition from new entrants and from cross-border operators, the report says. BanksÆ balance-related income is also likely to be reduced, as customers gain better access to Internet banking and then transfer their funds to interest-bearing accounts. To save costs, the period in which existing payment systems are run in tandem with SEPA systems during the SEPA implementation phase, should be as short as possible, the report says. This is because the cost of SEPA decreases as the old payment systems are abandoned and the benefits of the new systems kick in, it argues. Related Links
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