Software Group and PwC Romania on the future of digital banking in Romania

Originally published in Romanian in Ziarul Financiar

George Robev, Business Development Director Europe and Central Asia, Software Group: Customers want banking services, not necessarily banks, and this will dictate how relations in the financial-banking world will be shaped in the next five years.

The company headquartered in Bulgaria entered the Romanian market in 2021 and has in its portfolio several clients active in the financial industry on the local market.

The context of the pandemic has changed the way customers relate to banking institutions, so that now both physical and legal consumers prefer to interact with remote banks and seek to become customers of banks that can provide financial and banking services through through various digital solutions, and players in other fields, such as retail, have begun to diversify their portfolio of activities and provide financial services.

We see a strong trend in which customers want banking services rather than actually working with banks, and this new paradigm will dictate how relationships in the banking and financial world will take shape in the next five years," he told ZF George Robev, business development director for Europe and Central Asia at Software Group, a company specializing in the development and integration of digitization solutions for financial services institutions.

He added that following the pandemic context, there has been a change in the way banks operate.

''The link between the banking sector and telecommunications, logistics, retail, e-commerce and others is now augmented and redesigned in a way that allows financial institutions in Europe to be key players when it comes to new business models in the field of payments. Regarding the Romanian market, Romanian banks are taking the right steps towards digitalization. Some of the segments, such as corporate banking and the new revitalized wave of factoring business in Romania, are lagging behind the advance in Western Europe, Asia-Pacific or Latin America, but there is demand in this market. "

Thus, digital banking platforms have become the main channel of communication and interaction between consumers and players offering financial services.

"Banking platforms are the link between the bank's risk appetite and the regulatory aspects of operations. On the other hand, banking platforms help reduce the complexity of core banking systems (CBS) by enabling financial institutions to develop innovative, prompt and low-cost banking products and services for the bank, which means a rapid market launch. ", Added George Robev.

Also, digital banking was not new to players, as this transformation had already begun a few years before the pandemic. But banks have had to accelerate this digital transformation.

"In Romania, many banks have not been prepared to provide secure workflows for customers, so that identities and documents can be authenticated and transmitted digitally. Banking services offered in physical branches will not disappear completely too soon, but the transition to online and mobile is irreversible. Of course, this is a difficult process, many banks operating pre-existing systems and requiring their operations to move to an omnichannel approach, which in turn requires appropriate digital platforms to support such a change," said Gabriel Voicilă , partner within the audit and consulting company PwC Romania.

He believes that financial services - both those offered in physical branches and those offered through various digital platforms - are based on trust, so the security of transactions and operations is among the most important issues.

"The Romanian banking system was more conservative than in other EU countries, where the European and national norms and regulations in force allowed the early adoption of new technologies. The adoption of cloud services in Romanian banks is well below the average of other countries, although there are no technical or legislative barriers to prevent it. Another example is the widespread use of digital identity, which is fully permitted by law but has not really been adopted by banks. We notice that the pandemic acts as a catalyst and contributes to the elimination of these barriers ", Gabriel Voicilă also said.

 Also, at the beginning of the COVID-19 pandemic, there were many requests from companies active in the financial-banking sector that asked for help in repositioning the business to the new context.

"Technologies such as machine learning, deep learning, automation of the coding process always create tensions and raise questions about security. The experience we have gained operating in over 70 countries shows us that, at present, the legislative environment largely supports technological innovation. Measures such as PSD2-SCA, electronic identification regulations and trusted services, EU Open Banking API signature standards, the EU Payment Initiative provide a superior framework for digital transformation, in a compliant and secure manner. ", according to George Robev.

The Software Group company, headquartered in Bulgaria, entered the Romanian market in 2021, having in its portfolio several clients active on the local market in the financial industry. The representatives of Software Group did not provide more information about who are the customers they currently have in Romania or about the number of customers they want to reach by the end of this year, in terms of the local market. Software Group also has offices in the United States, Mexico, Australia, the Philippines, India, Kenya, Egypt and Ghana.

"Currently, we do not have offices in Romania, and the region in Europe and Central Asia is managed by our team in Sofia. The Romanian market has a strategic importance for us. We aim to have a long-term presence, as a partner in terms of end-to-end digitization of financial institutions in Romania ", added George Robev.