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Logica survey of European banks questions whether imminent implementation of the Payments Services Directive (PSD) and SEPA can be made mutually supportive

- Banks urged to start implementing their established PSD programme plans now if November 2009 deadline is to be achieved -

A new study of 22 banks across the EU and EEA implies the need for pan-European coordination to ensure a consistent PSD roll-out if the November 2009 deadline is to be achieved. The results of the survey raise issues as to how PSD transposition can support the achievement of SEPA implementation and migration without such consistency. Inevitably this puts additional emphasis on the significance of the Payment Services Directive Transposition Group led by the European Commission.

The survey of leading banks across Europe also reveals that a lack of clear dates for PSD transposition and the likelihood of geographical variation in the implementation of the PSD make planning difficult for banks. This affects those operating across Europe most severely. The issues raised threaten the consistent implementation of the PSD provisions. These provisions are an essential element in driving migration to SEPA Schemes across Europe.

The study, conducted by Logica in March and April this year, and supported by the IBOS Association, questioned 22 European banks on the implications of PSD transposition for European banks’ business and compliance planning programmes in payments and cash management.  The results of the study showed that less than a third of the banks questioned were in a position to know exactly when the directive will be transposed into national law.

Commenting on the survey’s findings, Simon Bailey, Director of Payments, Logica, said: “The research indicates that serious PSD disparities across countries could risk reinforcing national payments markets. A combination of variations in PSD implementation and national community-defined Additional Optional Services (AOS) for SEPA could ultimately undermine the development of a single payments market – the opposite of the original SEPA vision. For multi-country banks this adds considerable complexity for the assessment and planning process.”

All the surveyed banks reported the existence of PSD programmes and identified a primary department responsible for assessing the impact and for implementation. Respondents named the National Banking Association or central bank as the national body behind PSD transposition. For multi country banks, such as the respondents, this adds considerable complexity to the assessment and planning process.

The depth of the impact within respondent banks was also made clear with over one third indicating that ‘Special cross-departmental Programme Board’ is responsible for the PSD programme, i.e. risk if the programmes are not set on time and with appropriate lines of communication across the departments. Almost 100% of respondents expect increasing impact on ‘SEPA project/programme’ and ‘Product/Service definition and development’ that augment the pressure on cross-departmental, IT and business programme offices. Banks also report increasing focus on ‘Compliance programmes’, ‘Payments Operations redesign’, SEPA clearing and settlement’, and ‘Domestic clearing and settlement’.

Bailey continues: “The discrepancies in the timings and details of legislation across European countries threaten consistent transposition of PSD by November 2009. Each country can choose between a “Mini-PSD” (including all opt-outs) and a “Maxi-PSD” (with no opt-outs). This creates national variations in payments services and does not support pan-European consistency. It also makes planning within banks complex and subject to change.”

Additional results of the Logica study show that whilst all banks surveyed already have PSD programmes in place, over 75% of respondents will not commence implementation work to support PSD until 2009. This is because the substance of the local law transposition of PSD will not be known earlier. Given the complexity of the payments products currently offered across geographies that were identified by respondents, this may not be sufficient to enable banks to exploit these necessary changes for commercial benefit.

Slava Gnevko, Senior Payments Manager, Logica, added: “If Banks wish to gain benefits from the changes imposed by the PSD they simply cannot afford to wait until next year to begin implementation. If compliance is going to be achieved, then work has to begin now based on what we already know and to a certain extent, a ‘best-guess’ of how the transposition will turn out. Elements such as ‘crash’ impact analysis and business requirement studies are substantial projects and whilst it is encouraging to see that these are already happening, they must be completed in the next few months so that estimated numbers and changes can be fed into 2009 budget cycles.“

“For some national communities the detail of their national PSD text may only become available in 2009, however the main legislative changes are already clear. Our practical experience of managing programmes of change in payments, and those for SEPA in particular, suggests that banks need to embark on their PSD programmes now to be in time for the November 2009 deadline and to seek to exploit these for business benefit.“

The survey confirmed the complex mix of payments products offered by respondents. More than half of the respondents run ‘five or more payments services per channel’. This presents banks with an n-factorial assessment and implementation challenge to apply national legislative requirements of each country to all existing and planned services. Logica’s analysis of the survey findings suggests that banks may gain benefit from simplifying and consolidating their offerings and channels to reduce the compliance effort, cut cost and improve consistency of service.

Gnevko concluded: “To comply with the PSD in time and to exploit the potential for simplification banks need to establish a cross organisational Programme Management Office (PMO) for PSD and SEPA with clear group level ownership. The case for consolidating their portfolio of product offerings to keep costs in control and run efficient operations can then be made from a Group perspective.”

Notes to Editors

About Logica
Logica is a leading IT and business services company, employing 39,000 people across 36 countries. It provides business consulting, systems integration, and IT and business process outsourcing services.  Logica works closely with its customers to release their potential - enabling change that increases their efficiency, accelerates growth and manages risk.  It applies its deep industry knowledge, technical excellence and global delivery expertise to help its customers build leadership positions in their markets. Logica is listed on both the London Stock Exchange and Euronext (Amsterdam) (LSE: LOG; Euronext: LOG). More information is available at www.logica.com

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