As companies are being introduced to the first single euro payment services (SEPA) offerings, it should be borne in mind that preparations for SEPA have been ongoing for several years inside the financial industry.

In addition to deciding on the actual schemes for the new SEPA payment instruments in the interbank domain, there is a need for enhanced focus on the customer area in order to be able to fulfil the objectives and deliver what payment users expect to get out of it.

This has been the 'top of mind' in how to take SEPA to realisation in Finland, a country where payment efficiency has been of the highest ranking in Europe even before the SEPA introduction.

Therefore, two of the key players in the Finnish market, Nordea's head of integration services Finland, Petri Luoto, and Tapani Oksala, product manager of OpusCapita, sat down to discuss their collaboration in the past and into the future with focus on how to build on good experiences when moving into SEPA in order to ensure that the payment end-users are gaining the expected benefits from the European harmonisation.

Finland Takes the Lead with New Global ISO Standards

In February 2009, a corporate customer using OpusCapita's Payment Management software sent the first UNIFI ISO 20022 XML-compliant payment files to Nordea. These new, payment standard-compliant payments were transmitted via Nordea's SEPA-XML service, both within Finland and to the rest of the SEPA area.

The collaboration between Nordea and OpusCapita on the development of SEPA payment services has intensified year by year, culminating in the current situation. Today, the first joint customers have transferred to SEPA, and Nordea's new payment services as well as OpusCapita's SEPA-compliant payment transaction software are in use.

At both companies, preparations for the SEPA era have been underway for many years. Moreover, at an early stage the partners embarked on regular joint meetings. "Our collaboration has been all about the mutual provision and sharing of information, as well as exchanging ideas as a basis for further product development for both parties. Meetings with a bank provide a software company with an excellent means of obtaining the latest information on the progress of SEPA and its common standards. The SEPA payment schemes are owned by the banks on European level and therefore a close cooperation is needed to bring the schemes into realisation for a corporate. Neither we nor the banks can do this alone, so we become much stronger together," explains Oksala.

"An important aspect of our collaboration lies in the bank and the cash management software supplier having common customers. Our discussions have not merely been limited to the technical details or compatibility of the innovations, but also about how we can improve the payment transaction processes by taking account of the customer's viewpoint," describes Luoto.

Technology Support and Valuable Feedback

"On the bank's side, we also receive valuable feedback from the software companies. The software suppliers integrate the bank's services with customers' systems, these experts being able to identify potential problem areas in our services and then propose the right improvements," says Luoto.

Luoto continues: "With the exception of its internet bank customers, Nordea no longer supplies its customers with bank connection software in Finland. Since we offer interfaces utilised by bank connection programmes, we are fairly reliant on the ability of software companies to develop and supply software that meets our customers' needs. In this respect, close cooperation is paramount."

In addition to introducing the new payment transaction standard, UNIFI ISO 20022 XML, the changeover to SEPA payment transactions in Finland entails a new data communications and data security solution, as payment transactions switch to using Web Services data transfer and the PKI security protocol.

Providing bank connectivity based on modern technology offers many advantages over previous solutions. Data communications are always encrypted; through this channel, identification can be performed at individual user level or company level, and material can be compressed during transmission. This is important when changing over to XML formats, which are larger and more content-rich than the previous ones. PKI security and digital signatures support the processes of both small and large customers alike.

In the modernisation process, Finnish banks are seeking to collaborate with software companies from the outset. For example, the three largest banks, Nordea, OP-Pohjola Group and Sampo Bank, already began to set down their Web Services data communication specifications years ago; at an early stage, draft specifications were also forwarded to software companies for their comments.

Oksala reminds us that OpusCapita has good experience of acting at the interface between companies and banks. He states that, in this process, OpusCapita has been able to act as the banks' sounding board and highlight issues from a fresh perspective: "For our own product development, our collaboration with the banks has provided us with the necessary technological support and, naturally, information on the practical implications of Nordea's specifications for both the UNIFI standard and the Web Services and PKI protocol. For instance, how should we treat PKI certificates in our system so that customers' and Nordea's viewpoints are taken into account, or at a more detailed level, what kinds of data fields are required for SEPA payment material?"

Oksala continues: "For the SEPA era, we have developed completely new payment management software. In product development, communication between our and the bank's technical staff has been ongoing since we began to make tangible progress with the new products, especially during practical testing."

Higher Level of Automation and Flexible Integration

Both men agree that a higher degree of automation has constituted the major added value created by the collaboration. Petri Luoto emphasises the importance of a well-functioning integration between the customers' systems and the bank interface. "The better the data content of those systems meets the requirements of both sides, the more automated the entire electronic banking processes can become," Luoto states.

"Such a partnership ensures that we can take account of the value chain from one end to the other," Oksala adds.

"In Finland, automation has already been brought to a very high level," says Luoto, reminding us that banks have long been collaborating with each other and with software companies. Finnish payment transactions have been based on transparent, common standards, which have enabled payment transaction automation.

"Thus, Finland can boast efficient payment transactions: processes are automatic and efficient, and costs are low compared, for example, with the rest of the SEPA area," adds Oksala.

The joint challenge has been to ensure that nothing from the previous Finnish system is lost during the changeover to European standards. "The development of SEPA payment transactions has not only concerned changing our national standard to a UNIFI XML format, but also the benefits we can reap from this. In addition to SEPA payments, the new standards will be applied to other services, such as outgoing foreign payments, currency payments as well as salary and pension material," explains Luoto.

However, the discussion is about to move onto forthcoming issues, such as account reporting based on the UNIFI XML standard. Regarding the introduction of SEPA payment material, Oksala compares the current situation with the corresponding one a few years ago, although he estimates that the new account statement standard will be introduced somewhat more speedily, since outgoing payments have already transferred to the new standard.

"In terms of efficiency, we must now assess whether a daily account statement is frequent enough. Companies could obtain account transaction information 'online' as soon as transactions occur. This is a good example of how, at an early stage, we can begin discussing the launch of a new feature in conjunction with a technical innovation," Luoto comments.

Increasing SEPA Awareness is a Joint Challenge

In addition to technical preparations and product development, the companies have also joined forces in order to increase SEPA-awareness. "OpusCapita has arranged a large number of SEPA-related customer events, seminars and training sessions, where we have informed our customers of the situation at the banks at any given time, as well as progress with SEPA payment transactions. We have also participated in events arranged by the banks, in order to deliver briefings on software development," Oksala comments.

"Moving over to SEPA within the target schedule will be challenging. As our starting point, we said that if the banks didn't act now, the required changes wouldn't happen," adds Luoto, continuing: "One of the advantages to gain from early adoption to global ISO standards and SEPA payment instruments is definitely to provide our customers with the means to succeed in their business not only domestically but also in the international arena. Bringing the high payment efficiency experiences from the Finnish market into the European area gives enterprises and corporations a better chance for designing their optimal processes in the future."

"Therefore, it is crucial that the introduction of SEPA payment transactions and the various pilot projects be as swift and easy as possible from the customer perspective. Continuous cooperation will enable this, meaning that the development of future services can also be based on such collaboration," conclude Oksala and Luoto.

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