Monday, September 15, 2008

Missing in action

Guest blogger Gareth Lodge, research director, European payments, TowerGroup, acknowledges those banks that are no longer with us as the credit crunch continues to bite, despite the healthy turnout at Sibos in Vienna.

It’s official – Sibos is upon us again. At first glance, the stands are bigger and better than ever, and the exhibit halls seem bigger and busier than ever. There is an air of determination to get business done.

Yet, the proverbial elephant in the room is still there – the credit crunch. It’s been an explicit topic in some of the conversations at TowerGroup's party last night, but it has also been an implicit undertone to them all. A few friendly faces are “missing in action”.

After last year's Sibos in Boston, I forecast that the shape of the European payments industry would start to change dramatically as we saw the consolidation of both the banks and their suppliers as the goals of SEPA started to be achieved.

I was spot on in many ways – no ABN AMRO stand is an obvious example. TowerGroup originally believed that the bigger players – whether bank or supplier - would try to gain both market share and a broader range of offerings. There have been some eye-opening mergers in the last 12 months which I’m sure no-one could have seen coming – HP buying EDS anyone? However I suspect that the economic conditions will start fuelling the changes further, but perhaps in a subtly different way.

It will be interesting to see during the course of the week who announces what deals. The party gossip suggests some significant deals, though banks seem reluctant to allow their vendors to announce details. However, if a vendor or a bank isn’t doing something, then both parties should probably be worried.

Banks may not have all the answers yet to SEPA Direct Debits compliance, but they should be on a path to getting there. Those banks yet to make a decision may find that the vendors who could have helped them are already engaged with their rivals.

Conversely, those banks with stronger balance sheets may also strike while the prices are low. Indeed, it could be said this is exactly what is happening in the German market. This of course has an impact on the ecosystem that supports that market.

Suddenly, some vendors may find that the main client that underpinned their business is gone. We believe that the vendors who exhibit in Hong Kong next year could be missing a few well known names. We certainly do live in interesting times.

No comments: