Creating cooperation along value chains

Gábor Ákos Dávidházy

Leader of the Sub-Working Group on Public Services within the Working Group on Innovative Services in the nationwide project

BACKGROUND

In June 2017, I had the honour to be asked by Executive Director Lajos Bartha to lead the section of the Working Group on Innovative Services in the nationwide project on the establishment of the instant payment system (IPS) concerned with the opportunities for state use. I welcomed the professional challenge personally as well as in my capacity as the strategic and project director of Nemzeti Mobilfizetési Zrt., since the national mobile payment system project implemented by our Company in 2014 also focused on a unique and nationwide platform, which has been expanded with several ‘smart’ services since then. The nationwide instant payment system project was also connected to my everyday work. 2017 saw the establishment of the Electronic Payment Service Providers Association (EFISZ), thanks in part to two subsidiaries of the MNB (GIRO Zrt. and the Pénzjegynyomda Zrt.). When the EFISZ was founded, a strategic objective was to support the development of the Hungarian cashless electronic payment ecosystem and new service and business models. That is why I was happy that I could draw on my experience obtained in the abovementioned previous nationwide project as well as the dialogue started in the established professional association, in a unique, nationwide project that is considered exceptional even by international standards, and whose national economy impact may be huge in terms of reducing cash use in the years to come.

SUNDAY BANKING

The central element of the IPS is its real-time nature, which means that banks process credit transfers within 5 seconds of their receipt, on a 24/7/365 basis. The service marked the beginning of a new era in the Hungarian banking system. Having familiarised myself with the operating rules of the instant payment system, I believe that perhaps the feature that brings real breakthrough in conducting personal and business finances and that facilitates and also transforms our existing payment habits and processes is the 24/7 access to the service. In view of the boom in ‘instant payment’ solutions in Asia, this undoubtedly is only the beginning, and the large number of auxiliary services built on the underlying system will be key in meeting the expectations regarding the new system.

Furthermore, I see a trend of the once-forgotten QR codes making a comeback all around the world. Asian examples highlight simple data entry methods, therefore I believe that QR codes will proliferate everywhere from commerce to transportation in the years ahead in Hungary and other parts of Europe as well.

I think that perhaps the most visible changes that the general public will encounter in their daily payments will be the request-to-pay services and the boom in QR codes.

PREPARATIONS

After the national project structure was established, two parallel auxiliary services working groups started operating: one of them included market participants, while the other mostly involved state players. The working group related to state use typically comprised representatives from state-owned enterprises, ministries, authorities, payment service providers, developers, institutions concerned with accepting electronic payments and the firms providing public payment services. One priority task of our working group was to explore the opportunities for using the instant payment service in public payment situations and identify the necessary collaborations; I am convinced that establishing these contributed significantly to the success of the project.

However, it was important to familiarise ourselves with the operating structure of the participating governmental actors to identify the areas of application, and this could only be achieved by knowing their IT features. We also found that as the technical implementation of the project progressed, the value chains where the stakeholders were addressed since the launching of the project were gradually taking shape and a professional dialogue started an evolving between the participants. Our work method was the purpose oriented

workshop, where a small team of experts discussed a predetermined payment situation in a focused manner. They provided feedback and policy proposals and comments to the nationwide project. After several expert workshops, a policy team within the nationwide project was formed, in which my colleagues, working alongside their daily tasks sometimes late into the night and occasionally on weekends devoted their time to the conceptual development of the individual payment processes to the best of their professional knowledge and I would like to express my gratitude to them for that.

The partnership discussions helped us identify the aspects that determined the technical, legal and operating conditions necessary for the successful implementation of the services. As the implementation progressed, there were increasing calls for a wider consultation, therefore we participated in numerous forums targeting a wide range of clients. One such special event was the specialist conference organised by the Hungarian State Treasury, then a ‘Survey on the potential support for the introduction of the instant payment service to the Hungarian State Treasury’ was compiled, which provided useful feedback for the nationwide project team.

The experiences from the expert discussions confirmed the need to target both state players and market participants and facilitate their closer cooperation, because the service would be developed as a result of the partnerships between them. After the series of policy consultations of the Innovative Services Sub-Working Groups we decided that for the sake of efficiency and information flows the two working groups would be merged, and that we should continue coordinating the policy work together with my colleague Monika Németh, by dividing up the sector-specific tasks between ourselves.

LAUNCHING OF THE SERVICE, FUTURE OPPORTUNITIES

It has to be noted about the IPS that it was the result of around four years of development, requiring a major transformation in the whole Hungarian banking system, particularly in IT. The instant payment system launched on 2 March 2020 is a true success story for all participants as the system is stable and the nationwide project has achieved its purpose. But, as we all know, the work has not stopped since the preparations for the appearance of auxiliary services (e.g. request to pay) continues. This triggers new ideas not only at the financial institutions but also in other sectors, such as the insurance sector or utility companies. I believe that unlike in the initial period when we were still familiarising ourselves with the world of instant payments, we now have established professional competence that can identify business opportunities beyond the technology. One thing is for certain: if anything hinders the implementation of a new system, it is never technology.

Without the collaborations along the value chain, at the end of the day all we see is a completed IT project—without the services. The continuous education of the public is also important, and it has to begin in the higher grades of primary school because our children grow up in this instant payment world; they take the real-time services for granted.

The partnerships established during the instant payment system project guaranteed the success of the launching of the service, and they will also guarantee that its application will appear in our everyday lives. I hereby wish to thank the members of all working groups and my colleagues and partners for the joint work in the recent period.