SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND e-SEPA - Where Do These Initiatives Stand? 21 March 2011 Harry Leinonen Harry Leinonen The views expressed are those of the author and do not necessarily reflect the views of the Bank of Finland. International Payment Summit 2011 Royal Lancaster Hotel, London

SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND SEPA initiatives seem to STAND still  Very slow uptake of SEPA in general 15% in 3-4 years  Finland is an exception, 50% increase in last 12 months  E-SEPA is dependent on SEPA as the basis to build on  End-date regulation progressing slowly – authorities in some countries want to postpone SEPA?  E-SEPA is dependent on SEPA as the basis to build on Harry Leinonen A clear and ambitious dead-line get banks and customers moving. Would an earlier regulatory intervention been a more efficient route compared to past 10 years?

SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND What is e-SEPA?: Increased automated e-integration  Common e-standards connecting to all banks in SEPA  Receivers’ e-reference (ISO RF) available throughout SEPA  e-mandates to automate direct debits in Europe  Common e-invoice service including cross-border usage  Common card and card transaction standards including expanded transaction e-info in-line with e-invoices  Common certified EFTPOS terminals and software  e-/m-payment solution for e-/m-commerce  e-discounts or lower e-tariffs on e-SEPA services (compared to old legacy services) Harry Leinonen Moving towards straight-through-processing in the common network environment towards a real-time economy

SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND ISO the basis for e-SEPA  For initiation of credit transfers, direct debits and card payments, e-payments and m-payments  For received payments/statements of accounts  For e-billing  For straight-through-processing including expanded references Harry Leinonen We need to get the common basis in place in order to support new developments! We need to get software vendors to implement SEPA. Vendors want completely common ISO implementation

SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND EPC internet e-payments objectives  Bank-driven alternative to current non-bank developments  Based on immediate acceptance but with t+1 SEPA credit transfer delivery  Current national competing models to find common solutions  Difficulties in finding common identification, security etc solutions? Harry Leinonen Merchants and consumers have problems with a large flora of competing non-standardized solutions. It is the lack of a common competitive bank solution, which provide a market for non-bank-, overlay- etc services

SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Will the GSMA/Card system cooperation break the ice?  Simple solution: digitized cards in the mobile phones  Improved NFC-based customer interface in all new phones  Other improved features: ticketing, archiving, back-up  Do we need e-payments when we have m-payments? Harry Leinonen It seems that TELCOs are more innovative and faster to implement than banks A good m-payment services could cover a large demand of e-payment services

SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND Modern e-technology possibilities  Common standards used by everyone  XML is an improved data presentation model  XML provides improved possibility for data content updates and transporting data to relevant process  New possibilities in building common libraries of software modules for common use = standardization can take on large step forward Harry Leinonen The payment/banking industry need to seize the e-technology benefits already employed in other industries

SUOMEN PANKKI | FINLANDS BANK | BANK OF FINLAND We need to stop protecting legacy “steam-engine” systems and instead start building modern e/m-payment SEPA highways for increased customer benefits Harry Leinonen