A new report from Aite Group, LLC provides an overview of various European payments initiatives and takes an in-depth look at those that impact non-European banks.
Based on qualitative interviews of 15 non-European banks, the report provides suggestions for ensuring compliance with these regulatory and business practice initiatives, and minimising unnecessary changes, which could prove costly and time-consuming.
Since the introduction of the euro as a common currency for many European countries, there have been a number of initiatives leading up to the Single Euro Payments Area (SEPA). Regulators drive some activities while other activities focus on processing efficiency. In recent years, there has been a requirement for payments originators in the European Union and European Economic Area to provide an international bank account number (IBAN) and bank identifier code (BIC).
Although the IBAN is not adopted broadly beyond Europe, some European banks are charging non-European banks repair fees, delaying payments settlement and returning payments unprocessed, which costs the banking industry approximately $25 million.
“All banks must ensure they understand the fundamentals of the European payments initiatives and are communicating them to their clients. Careful review of nostro/vostro account statements is essential to identify inappropriate charges. Banks need to be aggressive in negotiating for refunds of those charges, and may have to change correspondent banking relationships in order to avoid incurring erroneous charges,” says Nancy Atkinson, senior analyst with Aite Group and author of this report.