European digital lending scene post COVID – a 1,5 year digital gap disappeared in few weeks

Mariann Harrison

European digital lending scene post COVID – a 1,5 year digital gap disappeared in few weeks

Only a few weeks after white-collar crew started to recapture their desks in the downtown offices and a few days after the first international border openings

Many of us try to understand the actual economic situation and predict the upcoming quarter. If we focus on raw data (number of infected people, economic regression, etc), the CEE countries are the unexpected winners of the pandemic in comparison to rest of Europe, but with no reason to celebrate. While the rapid provisions and seriousness of curfew in Hungary and in the surrounding countries stopped the infection from spreading this spring, our economy has slowed down, and there is neither an effective treatment nor herd immunity. After 3 months there is no way to maintain the extreme social distancing. People require to restart private life and the economy as well. With these conditions a second wave of the epidemic can be highly lethal, but most businesses can’t decide which scenario to bet for? There is still a slight chance for V-shape economic restoration (stock markets priced this scenario, fingers crossed), immediate global epidemic with high mortality rate after the summer reopening is also a possibility and of course, many shades between these two extremities.

It has to be stated that our daily life is not got back to normal yet, but we are in time to research and examine the adaptation to the situation of the population. Deloitte Digital has done its great series of Digital Banking Maturity Survey, and last week I had the pleasure to check the 4th edition of this survey ( on the Portfolio Financial and Corporate IT online conference.

We at ApPello, as Digital Lending specialists , are always keen on the digital maturity of markets across Europe and in particular markets we are active in. In the last few years we had perceived that from our key markets – Austrian, Czech and Slovakian banks were ahead of the Hungarian banks in Digital transformation and adoption – but the latest survey shows that Hungarian retail bank customer’s behaviour has changed due to COVID. A 1,5 year digital gap disappeared in few weeks with respect to client’s digital maturity.

We strongly distinguish the Retail and SME/Corporate segments from the point of business opportunities of our clients, but there is a related trend in digitalization in these segments.

If we focus on the retail segment, we couldn’t agree more with the Deloitte survey: the percentage of digital clients went up from 45% in 2018 to 81% in 2020. If we divide the digital segment to digital-only and omnichannel bank clients, we can see that the number of digital-only clients are growing significantly, while the number of traditional clients are decreasing and the numbers for omnichannel users remained almost the same. Reading this survey, we would confirm the short-term effect of the global crisis to personal lending and mortgage, but we believe it is more important on a long-run that clients have accepted existence of complex digital lending products during the epidemic. We have to admit, in the last 2-3 years we were a bit sceptical in evolution steps of retail lending:

We thought that from UX perspective mortgage is manageable only via omnichannel approach because of its complexity and long-term client commitment.
Further expedition of native Banking Mobile Applications is less effective than focusing on responsive client portals
The Deloitte survey strengthen our second concept (4% is mobile-only, while 36% of clients are fully digital and 46% omnichannel), but we could bet that in 2 years digital clients will accept an End-to-End mortgage as a viable option.

Finally, some thoughts on Corporate and SME lending: the technical perspective is very similar like in the retail segment. It is obvious: many employees will stay in their home office, both back office and client facing personnel. These employees will need a fully digitalised banking processes and without doubt their clients as well. ApPello Digital Lending solutions are designed and developed to support exactly these needs, from workflows automation to low code application configuration and development. From as corporate lending perspective – we believe 2021 will show first sign of the recovery of global economy with the emerge of digital corporate loans.

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