Navensis: Here to help with SEPA migration – Markus Gremmel

When the European Parliament issued a statement earlier this year confirming that it had come to a final agreement over the deadline for Single Euro Payments Area (SEPA) implementation, it was with the hope that it would give banks and corporates a much-needed jolt.

Set in stone for February 2014, players have - at the time of writing - 15 months to migrate their legacy systems to SEPA, which, in turn, will require them to upgrade their payment strategies, develop new products and ensure all services are fully compliant. That's no small undertaking, especially for multinationals with diverse subsidiaries.

"SEPA credit transfers (SCTs) stand at 30%, while SEPA direct debits (SDDs) represent a negligible 2% of European payments."

Regulators have long bemoaned a lack of awareness across the financial industry. The latest figures, released by the European Central Bank in September, don't make for the best of reading either - the adoption rate of

SEPA credit transfers (SCTs) stand at 30%, while SEPA direct debits (SDDs) represent a negligible 2% of European payments. Yet, according to Markus Gremmel, managing director at Navensis, there has been a noticeable uptick in SEPA-based dialogue among his company's clients, who are starting to appreciate that it is a case of now or never in terms of upgrading their legacy systems and streamlining payment processes efficiently.

"We are seeing a change in the view of SEPA, especially among mid-sized players," he says. "With the likes of contract and mandate management, many are already looking to the future. My feeling is that many people are realising now that this change is going to happen, whether they like it or not, and that it is going to require a lot of action."

Key services provider

As a subsidiary of BAWAG PSK, Austria's fourth-largest bank, Navensis offers a broad gamut of payment transaction processing services to both banks and corporates (via its parent company). As well as processing 20 million payment transactions a month, it also scans and archives over two million documents a month, which includes verifying and interpreting paper-based slips.

Its other services include format transformation, reconciliations, investigations and mandate management. With 180 employees, the company has become one of the key players in its field, serving the Austrian market and partners across the wider Central and Eastern Europe region. In the face of SEPA, the mandate management service has proven to be of particular interest among clients.

Able to facilitate the transition to the new direct debit scheme while mitigating disruption, the group offers a comprehensive customer management service, comprising data capturing, administration, printing and dispatching.

"Navensis processes 20 million payment transactions, and scans and archives over two million documents a month."

"By replacing national formats with international standards, there is the danger of SEPA reducing flexibility for businesses," says Gremmel. "For example, even with SCTs, the narrative text is limited to 140 characters, so we have started to help our clients by developing solutions that basically allow for extended formats, and are able to convey and transport information in a more flexible way, which can, for example, be used to submit salary information."

Complex compliance issues such as these and the IBAN have undeniably contributed to the disappointing uptake among businesses, which are unwilling to make the necessary investments in economically straitened times, as Gremmel explains.

"We are currently working on solutions with them in order to convey more information," he says. "However, we are still seeing many corporates - roughly 80% - using the old domestic formats. They will experience these challenges only at the last moment and might have a difficult time solving them before the SEPA deadline.

"IBAN also adds greater complexity when scanning and interpreting paper payment slips as customers are still not used to it and we are facing very high error rates. This requires intelligent solutions for data repair and enrichment, which Navensis has developed accordingly."

Separation of liquidity management

The ongoing eurozone crisis has also cast a spectre over SEPA migration. Still carrying liquidity fears, large corporate customers are understandably more prudent when it comes to managing liquidity flows. In light of this, Navensis and its parent company BAWAG PSK have jointly worked on process solutions that better allow its clients to split the payment processing from the underlying account, allowing for complete visibility and flexibility with regards to liquidity flow.

And with the paper-based transactions gradually being phased out, Navensis's electronic-to-electronic transformation service remains popular with cost-wary and time-conscious clients.

As technical standards remain in flux, the service eschews the need for expensive IT investments by effectively translating in-house formats into standards such as XML - fundamental to the SEPA initiative - with the option to change them back.

Paper-based processing - maintaining scale

The group is already in the middle of ramping up its services for paper-based processing, which will be critical in ensuring future infrastructure utilisation and offering competitive prices, as Gremmel explains.

"Navensis’s electronic-to-electronic transformation service remains popular with cost-wary and time-conscious clients."

"While we still do a high number of paper-based transactions, I feel that it is getting to the point, at least in Austria, where it has become very hard to sustain the infrastructure for payments processing alone," he says.

"What we need to do is to be able to justify such investments. Therefore, we are also moving into an ancillary service area, using our payment infrastructure, and extending the likes of scanning, data recognition and data correction services to the non-payments field."

As Gremmel freely admits, "Other players are probably thinking along the same lines as us".

They would do well to do so. Armed with a rich history in payments, Navensis is perfectly placed to tackle the latest developments. Dependable, innovative and progressive, it will continue to partner corporates and banks, helping them adjust and comply with the latest regulations and migration issues as they continue down what should be the final SEPA strait.

Navensis helps its clients migrate their legacy systems to SEPA with a range of flexible services including mandate management and paperless solutions.
Markus Gremmel is managing director at Navensis.