Hot topics of the spring conferences of 2024
Executives of ApPello took part at the eFinance & FIN/TECH Festival 2024, deep diving into the hot topic of AI & Data Revolution in Banking. Great visions, experiences, technical and legal issues around digital transformation and utilization of Artificial intelligence, data protection, cybersecurity, Digital Citizenship, ESG, and sustainable finance issues were discussed with professionals from Erste Bank, Mastercard, MNB, OTP Bank, Raiffeisen Bank, consulting and technology companies.
Especially the roundtable discussion with Ferenc Alföldi, Gergely Czimer, Zoltán Dankó, Gábor Fejér, and Krisztián Kovács was exciting, seeing what are hot topics now in top Hungarian banks, how they are utilizing AI, what projects, successes and difficulties they are facing. As a summary, we highlighted three main areas from the valuable discussion:
Digital Citizenship
A change in the regulatory environment is keeping banks busy: Hungarian banks are currently working on meeting the requirements of granting “Digital Citizenship” when banking by 2026.
Utilizing development in technology for citizen-centric public servicing, the Hungarian government decided to implement the National Digital Citizenship Programme in 2022. In the last period, the legislative environment has been developed, online interfaces have been evaluated, user habits have been assessed and technology and service standards have been established. In the first phase the digital identity service, eSignature and e -Identification services will be launched (September 2024). Users will be able to verify their identity via mobile application, while electronic signatures will simplify the signing of documents. In the second phase (2025), consent-based data services will be introduced, allowing citizens to access the administrative interfaces of certain providers (also banks) using digital identification. In the 3rd phase in 2026, ePost, eDocument Management, and ePayment services will be launched.
Practically, for banks and financial institutions this change in the regulatory environment means granting digital login and identification, new ways of money transfer and document storage. As all of the banks have already digitized most of their business processes, this regulatory requirement means rather an upgrade or extension of their current systems than doing something completely new. The participants of the round table currently see this as a new challenge, a resource-consuming project in the short term, but in the long term they really hope that it will bring an economic benefit just like it had in the Baltic States – shortly after citizens got granted digital access to all state and banking affairs, all have benefited greatly from this, which is also shown by the outstanding GDP growth rate.
Core Banking
As Gen Z and Alfa arrive in the banking age, banks do not have the chance to stay old-fashioned without losing valuable clients – they have to attract and delight customers and keep pace with evolving security and compliance requirements. As a shift in paradigm, banks and financial institutions must also prioritize the transition from complex legacy systems to sophisticated, cloud-based technology platforms. Not surprisingly, Hungarian banks are also facing such issues as the need to replace outdated core banking legacy with a smarter, “slimmer” CBS. As most Hungarian banks operate with CBS introduced in the ’90s, the business need is clear, banks wish to reduce their operation risk and beat the competition by replacing outdated technology and offering seamless processes. However, projects like this are enormously time and money-consuming. Finding the right solutions is also a big challenge, roundtable participants agreed. The leading prem-solution provider can deliver the quality medium-sized and big banks need, but their solutions are not considered innovative enough. But on the other side, innovative, cloud-based challengers are often not mature enough to serve the size and processes Hungarian banks represent and need. Once the suitable provider is found, seeing the huge amount of work it is worth renewing and redesigning other parts of operations at the same time as well, said the experts.
AI
As the main topic of the conference, AI came up, some disappointment could be seen on the faces of the roundtable attendees when the so-called Large Language models were discussed, proving that Gartner’s Hypecycle curve was working: last year the hype around Large Language models was enormous, it reached the peak of inflated expectations, today we are rather at the trough of disillusionment, as the revolution in the corporate world did not arrive as expected. However, experts agree, that AI gave us a lot to thank both in the banking sphere and everyday life. We should not forget the countless achievements that are already natural to all of us, such as writing text/stories, analyzing software code, and writing documentation with the help of AI. The current disillusement only shows that there is still work to do, finding more ways AI can support banking operations for example by offering a better client experience, optimizing risk and fraud management, or automating most repetitive tasks, less staffing but enabling employees to concentrate on value-added tasks.
We at ApPello are passionate about AI and offer out-of-the-box solutions that can be utilized in the banking industry for example for business development, churn, and fraud prevention, collection, or cash optimization – if you are ready for the future, see our portfolio or let’s drop us a mail!
ApPello’s mission is to support banks on their digital journey. If we can help you with our core banking, digital lending and AI portfolio in any of the topics discussed above or have other ideas, challenges, we are here to talk!