12 September 2023
Magyar Nemzeti Bank has published its latest FinTech and Digitalisation Report on the current state of financial digitalisation, the global and Hungarian FinTech ecosystem and the level of digitalisation of the Hungarian banking and insurance sector. The digitalisation of financial services is unquestionably gaining strength, which is increasingly supported by the developments of the regulatory environment within the European Union. Due to the uninterrupted growth of the domestic FinTech sector, there are now more than 170 active FinTech companies in Hungary. Domestic banks and insurance companies have become more and more committed towards digital transformation, but after the Covid period, the pace of digitalisation development has somewhat decreased.
The spread of digital financial solutions has continued internationally, but different user needs among different age groups requires that financial service providers should strive to ensure that physical and online channels can be used simultaneously and conveniently. Among digital developments, cybersecurity remains a key issue for both FinTechs and incumbents, wherein the fight against malicious attackers takes place via the increasing use of advanced technologies. With the adoption of the Digital Finance Regulatory Package, the European Union aims to pave the way for the integration of advanced technologies into the financial sector with a comprehensive approach, which is expected to contribute to a more innovative and competitive EU single market.
The development of the domestic FinTech ecosystem is continuous, and there are more than 170 companies in Hungary actively pursuing FinTech activities. Micro and small enterprises play a dominant role among Hungarian FinTech firms, most of which have managed to operate profitably in the recent years despite the economic uncertainties posed by the pandemic. In partnership with banks and insurance companies, the majority of innovative companies in Hungary continue to focus on financial software development and system integration, payment services, data analytics and business intelligence.
The digital development of domestic banks continues to strengthen, which is supported by the the institutions’ high level of commitment. MNB expected from all banks to prepare digital transformation strategies, and the overall picture that emerges from these projects further development in the coming years. As a result of developments by the banks, the range of fully digitised products is expanding, whereby not only clients can use digital interfaces, but also the internal banking processes are fully digital. In order to further increase the long-term competitiveness of the domestic banking system, modernisation of internal processes and hardware is necessary, in addition to the further digitalisation of the product range.
There has also been a continuous improvement in the level of digitalisation of domestic insurance companies. Digitalisation is a priority for the majority of insurance companies, which is reflected, among others, in the wide online availability of the main insurance products for households. Nevertheless, a long-term, strategic approach towards digital transformation has not yet been adopted in all institutions. There is a need to improve the automation of processes with regards to insurance companies’ internal operations. Besides, a more efficient use of institutions’ data assets could also help in enhancing competitiveness.
https://www.mnb.hu/en/publications/reports/fintech-and-digitalisation-report