MNB launches new report on FinTech and digitalisation
PrintMNB launches new report on FinTech and digitalisation
2 April 2020
The Magyar Nemzeti Bank is publishing today a new, innovative report on the FinTech ecosystem and the results of the survey of digitalisation conducted in the domestic banking sector. The FinTech and Digitalisation Report, to be published annually, will take an overview of major developments in the areas of FinTech and digitalisation in the global and domestic financial sectors. Building on the findings and the conclusions drawn, the MNB is planning to take further steps to speed up the digital transformation process at domestic financial institutions.
The MNB’s FinTech and Digitalisation Report seeks to provide an insight into recent domestic and international developments in financial innovations, digitalisation and their underlying technologies, which are becoming increasingly dominant in Hungarian financial markets. The Report is split into three main parts. The first deals with international trends and developments in FinTech and digitalisation. The second contains an analysis prepared on the basis of the first survey covering FinTech firms active in Hungary. The third part of the Report provides a comprehensive overview of the domestic banking sector’s digitisation level.
At the international level, the FinTech sector has grown strongly in terms of its user base, the provision of products and services, as well as capital-attracting ability and market valuation. This has been supported by specific demand, supply and technological factors. All this has inevitably led to new regulatory responses; however, no international best practice has yet crystallised in this area. The MNB was among the first authorities in the region to establish Innovation Hub and Regulatory Sandbox which provide a good opportunity to identify the limits of current regulations and to test financial innovations. The enquiries received by these highlight new areas requiring regulatory attention.
The domestic FinTech sector has shown robust growth in recent years, which has been reflected in an increase in the number of employees and turnover, in addition to rises in the number of customers. In Hungary, the vast majority of FinTech firms provide B2B (business to business) services, with B2C (business to consumer) companies accounting for less than 10 percent. However, a large part of technological development ultimately results in improved competitiveness and quality regarding the provision of financial services to retail and corporate customers. The major areas of activity are data analysis and business intelligence, financial software development and systems integration, as well as payment services. Currently, about 60 percent of participants are active in these areas.
The results of a comprehensive banking system digitisation survey conducted by the MNB show that the digitisation of domestic incumbents has already begun and the banks surveyed are aware of the importance of, and the opportunities provided by, digitisation. However, there is still considerable room for improvement in terms of their digitisation level and preparedness. For banks’ senior managements, utilising the possibilities offered by digitisation as efficiently as possible is a clear priority over the medium to long term. In addition, increasing emphasis is placed on digitising workflows and ensuring work competences and circumstances that meet the requirements of the digital age.
The survey conducted by the MNB also sought information about the possibilities of remote working at domestic banks. It is a forward-looking approach that, with very few exceptions, Hungarian banks make it possible for their employees to work from home using the appropriate digital infrastructure. This is particularly important in the current epidemiological situation both in order to limit the spread of the disease and to maintain the proper functioning of the banking sector. By contrast, products fully accessible for customers online require a major expansion; and further improvements in human resources and systems development are still required to enhance the competitiveness and efficiency of the domestic banking system.
The fact that digitalisation can play a crucial role in managing the current difficult period both in terms of human health and the economy lends special relevance to the publication of the Report. The continuous and resilient functioning of the financial system is a top priority in order to enable it to support economic growth now and after the threats recede. In the current situation, the rapid transition of financial market participants to increasingly digital operations could be a real solution to mitigate adverse effects, moreover it could become a competitive advantage in the future. By pursuing the above objectives, it is indispensable to strengthen the digitalisation level of the domestic banking sector, to which the MNB intends to provide active support.