New dimensions in the Hungarian financial system: The Chamber’s experience with the instant payment system

Péter Dunai

Secretary General, Hungarian Chamber of Commerce and Industry

Hungarian micro, small and medium-sized enterprises are the backbone of the economy, they provide the sound basis for sustainable economic and social development, and they also play a central role in employment. For that reason, developments in this sector, those supporting their adjustment to the broader external environment, the enhancement of productivity and efficiency, expanding the opportunities for reaching external markets, increasing entrepreneurship and financial literacy are key components of the Hungarian economy.

The recent turbulent social and economic changes call for awareness and financial determination from market participants. This idea leads us to the necessity of an adequate level of financial literacy. The continuous development of financial literacy is becoming essential for national economies, including Hungary, since the high level and quality of financial literacy is the common interest of all economic actors. In recent years, several international scientific studies have confirmed that improving the quality of financial literacy is in the interest of not only households and companies but also the state, because the national economies where financial literacy is greater are usually more competitive, and are also better positioned in the global market. To ensure Hungary’s steady and sustainable economic growth and enhance its competitiveness, companies with financial awareness and a broad range of up-to-date knowledge are needed.

The above thoughts are closely correlated with modern payment systems, one of the main examples of which is the instant payment system. This scheme has been established in several countries, or the planning or implementation phases are under way. Hungary cannot fall behind in the digital transformation, because this is clearly essential in competitiveness. Having recognised this, the Magyar Nemzeti Bank took the necessary steps and laid the foundations of the new regulation in 2017. It has to be noted that Hungary was the first European country to make it a legal requirement to establish and operate the system. This measure of the MNB helped increase the country’s long-term competitiveness, and the Hungarian Chamber of Commerce and Industry joined these efforts as a supporting partner.

The HCCI is committed to supporting and developing Hungarian companies. In view of this, the HCCI considered it important to familiarise all micro, small and medium-sized enterprises operating in Hungary with the operating mechanism and inherent opportunities of instant payments, right from the planning of the system. In the instant payment system, credit transfers take just a few seconds to arrive at the recipient’s bank account. This scheme basically means that we have joined the world of the real-time economy, which offers various advantages to companies. First, it supports the reduction of cash use, which also helps the widespread adoption of electronic payment alternatives. The HCCI believes that this is particularly important because it improves transparency and allows companies to be more open towards the tools and solutions of the digital world. Of course, one should not forget the financial position of the companies, as the instant payment system can clearly improve the liquidity indicator of businesses. The HCCI surveyed companies about their expectations concerning the new service several times. All the surveys showed that most firms welcome the introduction of instant clearing. The companies also monitor customers’ views, which show that the new system resulted in increased confidence due to speed and simplicity as well as the C2C payment option.

The road leading to the introduction of the system was long and arduous, because several Hungarian and international regulations had to be examined and new ones had to be drafted. Yet, all the organisations taking part in the innovation exhibited exceptional professionalism, working in constructive cooperation. The Hungarian Chamber of Commerce and Industry did everything in its power to support the early introduction of the service and familiarise companies with it. We organised several events last year that focused on instant payments. These workshops allowed firms a profound insight into the advantages of the system, also providing an opportunity for stakeholders to prepare for the go-live of the payment system in a timely manner, with sufficient awareness. The representatives of the companies attending the workshops had the chance to share their observations, often constructive criticism and any further innovative ideas with each other. This was based on

the ‘open innovation model’, where the individual institutions and organisations and all stakeholders cooperate with each other to utilise the financial and human resources as efficiently as possible, rather than acting independently, relying on their own resources.

The introduction of instant payments presented a huge challenge to all traditional banks, whose account management systems had been unable to fulfil the requirements of 24/7 operation. Often completely new systems had to be built which can now meet the demands of stakeholders.

Feedback from businesses clearly shows the massive popularity of the instant credit transfer scheme. The experiences so far confirm that stakeholders quickly recognise the opportunities inherent in the system and how convenient it is for everyday lives and operating activities. It has to be noted though that significant differences can be detected in the use of the new service by company size. Firms with financial awareness are much more open towards using the system, while smaller outlets with less financial awareness and fewer digital skills sometimes fall behind.

We hope that the system and all its advantages will be used even more widely in the future. The Hungarian Chamber of Commerce and Industry will continue to support this goal as a dedicated partner.