Abstract:

The study examines the current trends in both the Hungarian financial and FinTech markets with projections for the next two to three years. From the findings, the country's FinTech market still lags behind her peers in the CEE region. The financial sector, regulated entirely by the Hungarian government, faces significant challenges in implementing information technology-related (IT) innovations. More specifically, the banking sector fails to develop game-changing innovations as the country is amongst those with the lowest IT budgetary support in the region—with the dominant player (OTP bank) being the only notable active innovator over time. The situation replicates itself in the insurance sector, capital market, and asset management. The Hungarian National Bank (MNB) regulation that exclusively restricts lending to banks deters FinTech investors targeting borrowers. On a positive note, there is significant growth in online shopping and the use of digital payments due to an increase in smart hand-held devices and internet reach. Still, online retail (E-tail) is less than 10% of the entire online retail market, implying the existence of business opportunities for FinTech investors. In the E-commerce market, a higher percentage of people prefer the use of digital payment platforms as opposed to mobile PoS payment with the trend expected to hold in the next three years even as the market grows. Interestingly, over 50% of online shoppers who used mobile PoS or M-commerce did so only once. Nevertheless, due to the minimal FinTech business opportunities in the economy and substantial capital requirement, edge-cutting innovations will come from established international as opposed to internal players.