A journey of cooperation and collaboration to the future

Paul Walvik-Joynt

Senior Vice President, Nets A/S

The world of Instant Payments has been my passion and working ground for the last ten years. When the initial contacts with the Central Bank of Hungary were made it was very clear that the ambition in Hungary was to create a momentum and a new service that would transform Hungary in many ways. Having a solid base in the Nordics we have always valued cooperation and knowledge sharing to arrive at the goal with the best solution. So, when in 2016 the Central Bank of Hungary came with an expert delegation to hear about our experiences on Instant Payments we were of course thrilled. Our CEO, representatives from the Danish National Bank and our unit Payments International took part.

It was clear from the outset that the Hungarian approach to developing insights is to have a very structured approach where details are being discussed across all levels of expertise, to really understand what are the lessons we have learnt. Through discussion comes clarity and this was the foundation upon which all subsequent interaction was built. It became apparent through our dialogue that the collaborative approach with a clear vision of transformation was the common denominator. My observation was that the voice of experts was, and is, highly valued, and paved the way for how Hungary both procured, planned and executed the path to Instant Payments. I think it is safe to say that the level of detail and curiosity to learn the full inner workings of all intricacies of Instant Payments in the context of what it means for banks, society and the development of the financial system was on a level that we could really appreciate. It felt like we had found some friends that we could instantly relate to – no pun intended.

In the Nordics we have the Law of Jante which is written by the Dano-Norwegian author Aksel Sandemose. According to Wikipedia: “It characterizes not conforming, doing things out of the ordinary or being personally ambitious as unworthy and inappropriate.” In our meetings with the Central Bank of Hungary and the Hungarian ACH (GIRO) during the execution of the Instant Payments project I think it became rather obvious that we are very proud of what we have achieved with our RealTime24/7 Instant Payments solution, so we were breaking the Law of Jante. What was particularly rewarding in the way we worked together was that when we were proud of features or approaches, then we were always met with a healthy dose of scepticism that we came to understand originates from a deep interest to really understand what is behind a feature, process or success that one has had. This sharpened our own view on what we have done and raised the bar on expectations as to what we could achieve together.

For Nets the journey together with the Hungarian community was, and continues to be, an interesting and rewarding journey. Challenging in the sense of the clear commitment and a very keen interest in making a real change in Hungary for society, people, and the financial services environment. When you set out on such a journey together something happens in the dynamics between people and organisations that in retrospect is interesting and rewarding to reflect upon.

We had already launched Instant Payments services in Denmark, Italy and Slovenia prior to the engagement in Hungary and we had a solid knowledge base to share regarding experiences and approaches to implementing the solution. It has amazed me when sharing, to see throughout the process an incredible ability of finding ways of overcoming challenges that were always constructive and objective. There are always areas where one feels that the path is straight and easy to make great progress on, and when you hit a bumpy or more difficult part of the path it is easy to resort to entrenched positions in overcoming obstacles. I must say that this has never been the case in our cooperation, challenges were overcome with dialogue to understand where to focus and who could best provide insights to the best way forward.

On 25 January 2018, after a very professional tender process, we could celebrate together that a deal had been signed in Budapest that would mark the start of a new era for payments that were identified as the right service, delivered at the right time with the right experience. The Instant Payment experience.

1 March 2018, the date of the first conference where the whole banking community was gathered to walk through expectations and milestones. The conference was conducted in

Hungarian and the Central Bank of Hungary was so kind to provide us with a translator for the whole event. It was very clear from the outset that there was a strong agenda of providing a solution that would be mandatory for all banks to use from the start. Substituting cash and providing a frictionless experience paved the way for entering a new way of paying, get paid and interacting. The key words that we brought to this conference were convenience, right now, reducing friction and bringing innovation. All of these elements have proved to be true in the subsequent implementation and will prevail for many years to come in Hungary.

Accelerating out of the starting blocks early for the implementation was paramount and in February 2018 the mutual project was kicked off. With the first delivery completed in record time on 31 July 2018 the foundation was laid for successful cooperation from the start.

This was followed by a huge undertaking done by all parties involved with a spirit of cooperation. The key to all successful implementations is always the spirit of cooperation and knowledge sharing. The strong collaborative effort was of particular interest to Nets since one of the requirements was to run our RealTime24/7 as a software installation on the premises at GIRO’s datacentres in Hungary.

The service was launched with strong attention from the Hungarian financial community. On 2 March 2020, all eyes were focused on the first transaction to be processed on GIRO´s RT24 solution leveraging the RealTime24/7 solution software from Nets. Nets had a support team in place inside GIRO´s operation centre, who shared this special moment with the staff from GIRO and who had worked with dedication towards this moment. Fortunately, everything went well and within hours hundreds of thousand transactions were successfully completed, a proud moment for GIRO marking the beginning of new ways of transferring funds and payments in Hungary.

The new GIRO Instant Payments service for Hungary will not just complete payments faster, end-users will also directly benefit from the capabilities and features embedded in the GIRO solution in terms of simplicity and convenience.

End-users will benefit from the possibility to replace account numbers with an alias such as a mobile phone number or a QR code making new ways of payment and transferring money between us possible. Person to person money transfer via is an obvious idea to explore with this technology.

Businesses relying on cash can also benefit from the instant payments made possible by GIRO. Transactions can be completed using a feature called Request-to-pay, where a merchant can request payment from consumers through e.g. a mobile app. These payments are instantly completed on terms comparable to cash, and the merchant gets paid as the goods are exchanged, fast and safe, the money will go directly to the merchant’s account reducing risk.

It will be interesting to follow how payments will develop in Hungary, and fair to say that 2 March 2020 was more than a special day for GIRO, 2 March marked the introduction of new possibilities for faster, safer, and more convenient payments for the benefit of Hungry as a nation.

The tremendous interest from the banking and fintech community shows that the steps outlined from the Central bank have been a catalyst for extensive innovation. It is manifested in events that regularly take place from FintechZone, the wide interest of presentations and discussions prove that Instant Payments is the new norm in Hungary.

The journey has just begun and we are honoured to be part of this, and to support the Central Bank of Hungary, GIRO and GIRO partners in realising the potential of the technology and delivering new services for the benefit of the Hungarian community.

When looking into the future we see that the opportunities are limitless, and we believe that many roads will be taken in the years to come. These will increasingly focus on ensuring that Business to Business friction is removed; one of the most obvious areas that will benefit from Instant Payments. Supply chains that can be supported with frictionless e-billing with just in time delivery of the services and related payments will thrive in this ecosystem. Sharing a vision to include rich data together with services being delivered will make the Instant Payments transaction invisible and woven into the fabric of Hungarian life. It will not only be the new norm, it will be the new way of living, transacting and collaborating for the betterment of Hungary.