12 April 2021
The MNB has published a Recommendation on the digital transformation of credit institutions. By issuing the Recommendation effective from April 2021, an innovative approach by international standards, the MNB’s purpose is to foster the process of digitalisation of the domestic banks, thereby improving their competitiveness. The Recommendation requires credit institutions to draw up and submit to the MNB a comprehensive digital transformation strategy and a timetable by 31 October 2021.
The pandemic has highlighted the importance of digitalisation of financial services as well. Although domestic credit institutions have recently been increasingly active in applying digital solutions, there is still an urgent need for a major mindset change and, along it, for significant and comprehensive improvements regarding digitalization, which the MNB intends to support by issuing a Recommendation setting a sector-wide common minimum level. In this context, credit institutions are expected to develop and submit a comprehensive digital transformation strategy and a timetable by 31 October 2021, the implementation of which the MNB will monitor on a continuous basis. Before drawing up its Recommendation, the MNB consulted with market participants and the Hungarian Banking Association.
The Recommendation, an innovative approach by international standards, covers all important areas of banking operations, and it places a great deal of emphasis on digital development projects related to customer service, the provision of information, and potential customer complaints. Another objective is to give high priority to the digitalisation of internal operations, including the transformation and automation of processes, the continuous training of staff, and the appropriate level of digitalisation of internal systems. The digital transformation strategy, covering the topics set out in the Recommendation, can serve as a shared compass or an industry-level minimum requirement for banking sector participants.
The Recommendation also requires the broader adoption of the digitalisation approach from the senior decision-making bodies, i.e. the boards of directors of the credit institutions. The MNB expects credit institutions to report annually, before 31 December each year, on progress in implementing commitments set out in the digital transformation strategy as well as on the results of comparative analyses performed, until the most distant goal laid forth in the strategy is achieved. The first such report will have to be submitted in 2022.
Magyar Nemzeti Bank