ING: SEPA and The Potential Behind the Politics - Robert Heisterborg

Regardless of the political manoeuvring behind SEPA, the deadline is drawing closer and companies must be prepared for it. However, it need not be completely negative, ING’s Robert Heisterborg tells Jim Banks; there are great opportunities to be had as well.

The introduction of SEPA from 1 January 2008 is heralded as a major change to Europe’s financial landscape, improving efficiency and lowering the cost of cross-border payments between members of the eurozone. The reality, however, is that it is more of a politically initiated move than a project born of the industry’s urgent needs.

It could be said, then, that the politicians of the European Commission will be the real winners when SEPA brings the price of cross-border payments in line with the cost of domestic payments, enlarges the market and creates more competition. While the politicians celebrate another step forward in drawing the markets of Europe together, the corporates and banks that have to operate under the new market conditions will bear the cost of transition.


Although there is certainly some truth in this view, time is short and the market must respond quickly to ensure compliance, whether or not it is enthusiastic about the change.

Robert Heisterborg, global head of payments and cash management at ING Wholesale Banking Products, says: ‘There is definitely a cost, as the date is a political target. It is not in sync with the technological and economic lifecycle.

‘SEPA is about making a single European market with more competition and transparency – that is the dream of the EU – but not only for banks, government departments and corporates also need to invest a lot to achieve that goal. It cannot rest solely on the shoulders of banks. The effort required by consumers, technology providers and corporates should not be underestimated.’

In such a climate, some banks and corporates are simply focusing on the cost and compliance issues. This approach will lead them to manage the transition process purely as a short-term project. This may be appropriate for certain companies, but – putting the politics aside – for others there could be significant benefits to be gained, which will only accrue if they take a more detailed and dedicated approach to their payments processes.

For corporates, this requires that their banking partners fully engage with SEPA and position themselves to provide comprehensive services to their clients. ING believes that companies should look further ahead and ensure that they are getting the best out of the new regulatory environment. It is, therefore, investing heavily in its capacity to provide post-SEPA services.


The impact of SEPA will depend very much on a company’s size, how it operates and the nature of the industry in which it competes. The effect of the new regulations is likely to be muted at the extremes of the corporate spectrum. For some large companies, SEPA will make little difference, as they generally already have cross-border cash pooling processes in place. Similarly, small companies with largely domestic businesses are unlikely to be much affected.

Heisterborg observes: ‘A local medium-sized company in Belgium, for instance, will not have much to gain, but a big company such as Philips, for example, will already have efficient local collection processes in place and sweep its liquidity into a pool every day. It already has its own version of SEPA, so the new regulations will not make a huge difference.’

For a host of companies in between, however, SEPA potentially offers substantial benefits. For example, an import/export company operating in the eurozone will be in a position to consolidate its accounts domestically, as it will no longer need to maintain some of its accounts abroad.

Recognising the needs of its corporate customers in the post-SEPA world, ING has dedicated resources to preparing for the new payments environment. Its extensive reach throughout Europe, with a presence in all major Euopean business centres, gives it the right platform on which to develop its services. Moreover, there are other qualities that it believes enable it to compete effectively post-SEPA. It has, for instance, the ability to scale in a fixed cost business. It is also closely involved with the development of industry standards, participating in interbank organisations such as SWIFT, EBA and EPC.

Add to this its strong track record in payments – most notably in the Benelux region, which is considered the most efficient and lowest-cost market in Europe, and Central and Eastern Europe – and ING feels it has a real opportunity to strengthen its competitive position.

Proof of the bank’s willingness to fully engage with the new regulatory regime is the fact that it is focused on developing an e-SEPA capability, which will rely on processes such as electronic invoicing.

ING’s commitment to embracing SEPA is driven by the understanding that corporates will only move on SEPA if they perceive that payments processes are cheaper or better than before, and that this will largely depend upon their choice of financial services partner.

Heisterborg says: ‘There is a cost and decreasing revenue from payments, so some banks will rethink their part in the payments chain. For corporates – whether they like it or not – SEPA is a reality and they must pick the right banking partner.

‘In the medium term, domestic payment schemes will disappear and companies need migration processes in place. For that they need the right partner.’

Engagement with SEPA allows ING to understand how corporates can best accommodate the transition. For instance, the timing of initiatives to achieve SEPA compliance is a crucial factor in determining cost.

Heisterborg recommends that companies align their planning for SEPA with their existing investment cycle to minimise costs and disruption: ‘Large corporates should implement SEPA technologies and processes when their ERP systems are at the end of their lifecycle.’


Notwithstanding ING’s commitment to SEPA, there is some disquiet about the new market. ING shares concerns with others in the banking industry that the new market is getting off to a laborious start. Heisterborg is disappointed, for instance, that some liquidity and payments volume remains inaccessible for the market party.

He says: ‘Some governments and government-related institutions are not open or not in a position to tender for their payments, so the markets could be much more open. Central banks, too, compete for volume and clients, but some have a monopoly on client business and processes. They need to be open to competition. The regulators preach one market, but there is much more room for the market to develop.

‘The benefits of SEPA depend on how open the market is. We have invested a lot of money – both as an individual bank and as an industry – but the market now has idiosyncrasies, such as the fact that banks cannot access all the volume in the market, some of which, notably client base and liquidity, is protected by others.’

While SEPA is a reality, it is not yet the complete package. It presents challenges to banks and corporates, which now have the opportunity to cooperate in squeezing the benefits out of a politically motivated change to their world of business.


Robert Heisterborg - wholesale banking products, global head payments and cash management - Mr Heisterborg has been involved in payments and cash management since 1989. His experience ranges from treasury, cash and liquidity management at large international corporates to the commercial and operational processes within ING. In addition, he is active in numerous (inter) national interbank committees, such as member of the EPC Plenary, vice-chairman of the EBA Clearing Board and Eurogiro Board member. He is currently responsible for the global ING wholesale PCM business. His responsibilities include product sales, product development and client service.

ING’s Robert Heisterborg sees great opportunities behind SEPA’s political manoeuvrings.