Digital banking in the CEE region explained by ApPello

Béla Vér, CEO of ApPello reveals for The Paypers how is fintech and banking software positioned within the Hungarian financial services landscape

ApPello was founded in 1998 in Budapest, Hungary and today it is a leading banking software provider in Central and Eastern Europe. Besides Hungary, we have opened offices in Bucharest, Prague, and Vienna, and currently, we have customers in 8 countries, but in addition to our regional presence, we are also looking to sell in more distant markets.

We provide banks, financial institutions, and neo-banks with modern digital solutions to simplify lending and help them compete in a changing environment. All our products are built on ApPello’s proprietary cloud-based digital platform, which uses advanced technology and business solutions available.

ApPello has implemented several products in Austria, Croatia, Czech Republic, Hungary, Romania, Slovakia, the UK, and UAE and provides services from Tier1 banks to smaller financial institutions.

Our active sales target markets are the CEE region, Western Europe, Far & Middle East.

Since the lead banks are members of the bigger banking network, we can see similarities in the CEE countries. For example, Erste customers are using the same George application in Romania, Austria, the Czech Republic, and Hungary. This applies to other banking groups as well. They prefer to select a solution centrally and do the rollout to all countries.

There are also economic similarities in these countries. For example, banks in the CEE region can make a reasonably good profit on retail products, which is not true for western countries. In Western Europe, you have to be very big (in the number of clients & portfolio) to make a profit in the retail segment. So, CEE banks in the region invested a lot in solutions to serve retail first, then they focus on the SME segment. The large corporate business line is very complex and full of unique deals therefore the digitalisation level is much lower than in retail.

We also see that the banks in CEE are reluctant to upgrade / change their core banking system. There was no CBS replacement project launched until now. In Hungary currently, 2 CBS replacement projects are running in the #2 and #3 banks.

ApPello feels the changing trends that affect the daily work of the IT staff. We met agile methodology first in Czech and Romanian banks followed by Hungarian banks.

Overall, the Hungarian banks’ innovation appetite is quite similar to other countries in the CEE region. However, there is one significant difference: in Hungary, there is a government tax on each funds transfer transaction, which hurdles the spread of many innovative solutions.

I think this is also the same in the region. The usage of the digital channels burst out thanks to Covid. People started to use contactless payment solutions everywhere. We have to mention 2 governmental measures:

1) Economy cleansing - the black economy was pushed back significantly, and the people got money in their bank accounts

2) The government forced all merchants to introduce at least one digital payment terminal at all cashier points.  

All around the world digital bankers are happily using modern apps like Revolut, Monzo, etc., however, ‘average’ users still don’t use Bitcoin trading facilities.

We were contacted by an international (card) payment provider, that needed a banking solution for their services, focusing on bank account management, account transaction management, and related services. With this they want to build a more comprehensive and complex service package for their customers, allowing them to grow and develop extra services in the future, based on the account management system. As a solution, we offered our core banking service, a uniquely flexible system developed by ApPello, a fully automated cloud-based account management system with a bank account, savings account, and lending functions, 24/7 online operation.

Due to working from a distance, all the meetings, developments, and configurations were done remotely. The online space did not cause any disadvantages, and as a result, it saved time, making the work more efficient. Our partner's development department has Ukrainian roots, so the war in Ukraine had an impact on development, business continuity, and collaboration. Our partner was able to reallocate colleagues, allowing work to continue as planned safely.

The services have been implemented in our partner's system and UAT (User Acceptance Testing) is currently in progress. Our colleagues, developers, business analysts, and testers, delegated exclusively to our partner, provide continuous support during the UAT phase, facilitating rapid response and the implementation of changes made as quickly as possible. After this phase of the project, the system will go live, and we will continue to assist our partner in case of any change requests, improvements, or new requirements.

The banking industry in recent years has started to join the AI boost. The main reason for its delay is that this industry needs best practices and methods due to its regulations limitation. ApPello realised this need on market and initiated research to develop a tool for its clients and support them with AI solutions. The AI portfolio contains an in-house developed AI engine and Data Scientist services for financial institutions that lack of AI modelling resources. The result is a comprehensive service framework including a software tool that supports model building, model execution, reporting, and documentation as well as Data Scientist services where experienced modelers provide methodological solutions for its clients. Why to choose the framework that ApPello provides for its clients? Because it is tailored for the financial industry, no unnecessary features are included in its solution, so it is cost-effective. ApPello management believes that providing AI will be essential for banking IT companies. Now it is valued as something extra, but more and more clients need overall support for their business processes.

*This interview is part of Unchain Fintech Festival, the first fintech and blockchain event of the CEE Region, held in Oradea, Romania, between the 13th and 14th of July.

About Béla Vér

Béla Vér is the Founder and CEO of ApPello, the digital lending platform specialist providing a comprehensive solution within the banking ecosystem. With a deep knowledge of how banks work and their technology challenges, Béla has been developing and implementing digital lending solutions in the cloud to help traditional banks stay competitive and support neobank innovation.