The Portuguese perspective

SEPA, embracing technology and why the Portuguese way is best. By Leonor Machado

The biggest challenge facing Europe from the implementation of SEPA is that SEPA was not a request from the market. It was a political imposition. It is difficult to migrate everything to this new set of requirements when we don't have a business case for it, and we don't have anything different to show to the public or our customers. If it had come as a natural requirement from the market, the migration would have worked better. I believe in markets, but I'm afraid we need to push something like this, because it is not natural. The biggest challenge is to move everything to this new reality. Afterwards of course it will better, but we need to be prepared.

It’s going to be difficult. Globalisation is very nice, but we live in a different world for payments. For most individuals, the biggest parts of payments are local, in the place where they live and where they work. There are a few travelling around and crossing borders, but that’s a small percentage. Of course it's different when we're talking about enterprises. That's another world, but you need to have both.

Once SEPA is implemented, it’s uncertain whether it will drive profits for banks. I hope it can, but the idea is to have benefits principally for customers. In this environment, it’s important to keep the customer’s feelings, the customer’s behaviour and the customer's welfare in mind at all times. You need to be aware of all these, and I’m sure at the end the biggest goal is to have some benefits for customers. The point is that we are all customers, and the benefits are targeted at us. Of course, I hope there is a positive outcome for the banks as well, which is why we are working so hard at this. We need to have innovation and to be creative enough to change things.

Day to day

In my day-to-day work, SEPA is not so much of a focus for me at the moment. It’s difficult, but I think it should be a natural thing. The bank is an old bank in Portugal, but despite this, it is very modernised. The Portuguese banking system is a very good one. There’s much more to it than many people know and think.

After the Revolution in ‘74, all the banks in Portugal were nationalised so there was no competition, and it was a great time for starting over with new technology and there was already a good infrastructure. In ‘85, privatisation of the banking began. We kept these foundations, and developed a lot of positive things from that. We have a good online presence, we have good systems at the ATMs where we can do everything – many more things than can be done elsewhere. You can pay taxes there. You make transfers. You can make direct debits. You can buy tickets for trains. You can buy tickets for concerts and shows. You can do a lot of things. You can pay for mobile phones. You can transfer from account to account. Not many people know this, but the prepaid mobile phone was invented in Portugal! You can pay tolls, and we have a system that we are supporting, because it's a very good system. Some time ago you need to be careful when passing through tollgates, but now the new ones that are invented, we don't need to stop at all. So we have a good system in Portugal.

When we are talking about old banks or new banks in Portugal, we are all supporting these systems, so better or we have these challenges in front of us. We are well prepared for this. It is not a problem in Portugal. If we do have one problem it is this: we are always saying that we are now the best in the world. We are the best in Europe, so you cannot tell your customers that we are making changes so you’re going to lose some privileges or some services. You cannot tell them that, as they will not understand and they will not believe you. So it’s very hard to have this challenge within SEPA. We are fighting or trying to keep our special functions, our added-value, otherwise it's very difficult. Our challenge is to build this opportunity to keep our level of service. We are different from others, and our approach is different.

The Nordics, they hate me when I say that, because they talk a lot about the Internet. I understand they have a very good Internet system, but they have a much colder climate and cannot come outside for half the year. We live in a situation where we can live our lives outside. We don't have Internet everywhere in our family homes, so we have this ATM system that works quite well.

All of Europe is now implementing the chip and PIN card, and many people ask me if it is going to be a problem, making all the customers change their payments. Here in Portugal we have the PIN system since the beginning. It’s compulsory to use a PIN, so that’s not a problem for us. Another problem now with SEPA for most European countries is that you need to ask your customers for an IBAN. Is this a problem for us? No, as for a long time we have been doing our transfers for direct debit with NIB, which is number identification banking, the same thing as an IBAN. Everybody knows that if they have the NIB with them, it’s easier and cheaper and faster. Because of this, the IBAN poses us no problem and makes no difference at all. For these kinds of things, we have support from the public.

Use of the Internet and online services is growing, and I think we don’t need to force it too much, because it's a generational issue. All the kids are starting their lives using it, and I think there are a lot of older people who are using it anyway. I see my father and my mother using it, and also embracing technology like SMS – for them, it's normal. Because of this, I don't think it's necessary to push the online aspect. It will grow naturally with the new generations, even the old generations that have inquiring minds. As for the kids, they are pushing people to do it. I think my mother writes SMS because of my kids, and they teach each other. She is now familiar with it and knows how to send MMS and photos. It’s more an organic process.

Security

All the things we do at the ATMs we can also do on the internet, of course, but I've found that people feel more secure at ATMs, because of phishing – their data is securely stored. The Portuguese system is also good for security reasons. I was speaking to someone from the UK, who said that card payments was a big problem with the card being used in two places at once – in the in the UK and also in Australia or something. It is not possible to do that in Portugal, as there are systems in place to stop that. We have a very good system for debit and credit cards. For our customers these services are all online, so they can be checked quickly, and our customers are used to having protection from the banks. They pay for service sometimes, but they know they will have the answer from the bank. All transactions are normally totally secure, but if there is a problem, the bank will solve it.

Leonor Machado is the Chair of the Cash Working Group of the European Payments Council and General Manager at Caixa Geral de Depósitos, with responsibilities in the payments area. She is also the chair of the SEPA Portuguese group.