Single Euro Payments Area. Market concentration and SAP Banking opportunities.

Dear,

By August the 1st, 2014 all the Banking payments in Europe should be processed with the unified format of the Single Euro Payments Area.

The Single Euro Payments Area is an initiative of the European Union with the objective of simplifying the process of cross-border bank transfers denominated in euro, by creating common payment instruments in its area of application.

http://ec.europa.eu/internal_market/payments/sepa/index_en.htm

The final objective is turning the fragmented national banking markets of the Euro-zone into a single domestic one.

Most of the European credit institutions have successfully enhanced their payment systems on time.

http://www.bankingtech.com/210552/eba-clearing-reports-uptick-in-sepa-payments/

But SEPA's full implementation is just the beginning of this unification process; European authorities are already planning additional regulations on credit cards, risk management, etc.

By the autumn of this year the European Central Bank will become the principal supervisor of the credit institutions of the area.

http://www.ecb.europa.eu/ssm/html/index.en.html

The homogenization of processes and regulatory framework is reducing cross-border barriers and bringing new competitors into the domestic markets.

At the same time we’ll see how limited growth is driving margins down and increasing pressure for costs reduction.

In this scenario, a critical competitive advantage is developing economies of scale, standardizing processes and technology.

That’s the idea, efficiency, costs reduction. Once again, the driver of the new financial system emerging of this Financial Crisis will not be driven by volume, but by efficient management of the resources.

Additionally, capital scarcity due to the higher Capital requirements of Basel III, collateral requirements in the derivatives market, and limited growth of the developed economies will bring higher competition on the Capital Markets; and ultimately, new waves of concentration amongst financial institutions.

Does SAP Banking have the answer to these challenges?

Of course it does; SAP has demonstrated in the last 40 years to have the know-how for becoming the world’s leader on deploying integrated, cross-border, multi-language, multi-currency and consolidated information systems.

The consolidated approach is embedded in the SAP Banking architecture from many perspectives.

ECC system deployed multi-company, multi-currency functionalities many years ago, supporting smoothly integrated cross-border business process.

This approach is also incorporated to the SAP Banking business suite; for instance, Banking Services has no restrictions for supporting multi-company, multi-currency and cross-border functionalities; and Bank Analyzer, in combination with Business Planning and Consolidation, and the reporting capabilities of Business Information Warehouse has the capabilities for offering the consolidated vision of the Capital/Risk and Accounting position of a globalized Financial Group.

Keep the word in mind, Assets Consolidation.

Since 2008 crisis, and in spite of the bad reputation of the “Too Big to Fail”, we see that the number of players is being reduced, consolidating assets in bigger and bigger financial conglomerates, reducing operational costs and increasing their systemic influence.

Is there any difference between the old “Too Big to Fail” and the new “Consolidated” model?

Yes there is, the old model was driven by volume and the new one will be driven by efficient Capital Management. Size matters, but it’s not the key point here.

But this post has become too long, we’ll discuss about it another week.

Looking forward to read your opinions.

K. Regards,

Ferran.