As European banks struggle to meet SEPA compliance deadlines, corporate officials are beginning to sound a lot like they did in the early years of Sarbanes-Oxley. They are grumbling about the high costs, slow payback and harsh deadlines. Sound familiar?

Six months after the first stage of SEPA, for the Single Euro Payments Area, went live, the grousing and inertia has many procrastinating and pressing for extended deadlines. “With all the regulation that banks have had in had to comply with over 10 years, it's not surprising that we're seeing the emergence of SEPA-fatigue,” says Rachael Hunt, European banking research manager at IDC's Financial Insights, adding that this lethargy is similar to the weariness that set in after Sarbanes Oxley (SOX) became law.

Indeed, some consultants agree. But if there is a lesson to be learned from all the SOX toil and trouble, it is that smart corporate policies can save money in the long run by building in mechanisms that deliver solid business benefits and increased profits across an enterprise. For example, SOX pioneers and consultants have said lately that the increased speed and reduced errors wrought by automating controls will ultimately more than cover implementation costs.

Still, it's hard to persuade European bankers to be optimistic. A recent study by software provider Fundtech showed that 44% of the 23 leading banks surveyed predict it will take five years or more to recover the lost revenue resulting from the harmonization of domestic and international processing fees across Europe.

That's why smart banks are developing value-added products and processes, such as EIPP (electronic invoice presentment and payments), mobile banking and reverse factoring, which are designed to promote the ultimate goal of seamless, straight-through processing, says George Ravich, Fundtech chief marketing officer. “Payments, which used to be a big profit source for European banks is becoming marginalized,” he said. “That's why they are fighting like crazy to become competitive in other areas.”

If they don't move fast, they could lose more than the difference in transaction revenues: They could lose customers, says Ravich. Increasingly, U.S. multinationals are paring down the number of European banking partners. And once the second stage of SEPA (processing direct debits and debit cards) goes into effect in November 2009, unless there is an extension, consolidation will be rampant. The first phase, processing of credit payments, was implemented in January.

Hunt agrees with Ravich that the long-term winners will be banks that offer the most competitively-priced, revenue-generating services. “Those that make SEPA compliance part of their business strategy can leverage market opportunities and eradicate budget inefficiencies common with regulatory projects,” she says. “Those that fail to invest now risk being priced out of the market.”