HVB: Standardised SEPA - Markus Straußfeld
Local interpretations can disrupt straight-through processing for companies trying to benefit from the opportunities promised by the Single Euro Payments Area. Markus Straußfeld of Bayerische HypoVereinsbank AG tells Jim Banks that is up to banks to remove the complexity.
The Single Euro Payments Area (SEPA) is almost upon us and, from 28 January, European companies must be at least passively enabled to accept SEPA payment formats, even if they choose not to be early adopters. SEPA cannot be avoided, but preparation may not be as simple as it seems.
As it stands, SEPA is less standardised than expected, meaning progress towards the key goal of higher straight-through processing (STP) rates may be frustrated, preventing some companies from realising cost savings from automatic reconciliation.
The universal financial messaging standard (UNIFI), known also as ISO 20022, seems to standardise the payments process, but it is open to interpretation. The result is a host of local subsets that can impede STP.
Markus Straußfeld, of Bayerische HypoVereinsbank’s (HVB) cash management and e-banking division, explains: ‘The XML format ISO 20022 is a global format and seems to be standardised, but there are minor technical problems in the detail – minor, but still enough to disrupt STP. If you use it, your SEPA payments stream will be in line, but different subsets in different countries will end up in mixed solutions. Some banks will only accept one of these group formats.’
HVB, Germany’s second-largest private financial institution and secondlargest retail bank, is part of UniCredit Group and is present in 21 European countries, so sees SEPA as a crucial matter. It comes up against different local payment formats and sees a need to accept them all as part of its service.
Straußfeld believes that it is up to banks such as HVB to handle all formats to optimise STP and simplify their customers’ payments processes. He says: ‘Companies don’t want to use different subsets for different banks. They want the same, standardised format. I believe banks should accept all SEPA core formats and regional formats. It’s up to banks to solve the problems, by avoiding proprietary formats, or SEPA won’t be 100% standardised.’
OPEN TO ALL FORMATS
HVB’s proposition for SEPA payments has a number of strands. Firstly, it recognises that payment files are often generated within ERP systems, so it offers consultancy in customising and optimising these files to improve STP.
If a customer wishes to use global formats, the bank will also support the most common ERP file formats and MT 101 formats, converting global formats into SEPA or national payment formats, depending on the quality and content of the messages.
Straußfeld adds: ‘After this, we can forward all these payments very costefficiently within Unicredit Group, ensuring D+1 in value dating, not only for countries participating in SEPA, but all over Unicredit Group’s locations. Our solution, European Gate, also supports existing national formats.’
Furthermore, while some banks will send back complete data files when exceptions arise, instead of providing repair services, Unicredit will help its customers with repair to ensure timely payment execution in time, providing that customers agree to such a service.
Since SEPA was first mooted, many organisations have spoken about the opportunity for additional optional services (AOS), but these have so far failed to manifest. HVB aims to change that.
According to Straußfeld: ‘Everyone said there would be lots of AOS after SEPA, but now we don’t find anything. We want to match customers ERP data files and match them to a SWIFT codes directory. We check SWIFT codes are correct, we check if your destination bank is SEPA compliant, then we issue regular payment or offer conversion services as needed.’
‘Customers experience problems, but they are not aware of the cause. They read that everything is standardised, but if you look at the details it is not straightforward. Companies need a banking partner with flexibility.
'SEPA can offer numerous opportunities for banks to add value, and HVB is taking a lead on providing connectivity and conversion services.’