Andras Kuharszki, Managing Director of OTP Bank Hungary, shared with Qorus and ebankIT his insights on their journey to remain a market-leading bank in the digital age. This interview is a part of the upcoming Digital Reinvention Radar 2023 report, brought to you by the Digital Reinvention Community.
The way people interact with financial institutions is changing at a fast pace. As customer expectations are shifting, financial institutions have to rethink their approach toward their users to be able to match the experience of other non-traditional companies. And to stay competitive – banks need to reinvent themselves.
Together with our partner ebankIT, we believe that the main purpose of this reinvention is humanizing customer experiences. Consumers expect a truly personalized banking experience integrated into their daily life. So how can banks deliver humanized services that address the new wave of banking customers?
Q: Could you tell us more about OTP bank?
A: OTP Bank Group is at present one of the top 30 largest banking groups in Europe, both by market cap and by total profits. We are present in 12 countries, mostly in high-growth CEE economies and also, being true pioneers, as the first EU bank participating in the privatization of an Uzbekistani bank. With total assets of over €80 billion, we are a bank of systemic importance not only in our core market – Hungary – but also a market leader in several segments of our other markets.
Q: Is your bank currently going through a banking transformation process or has it taken up a project of this sort? If so, can you give us more details on the timeline, teams involved, initial aim, etc...
A: OTP Bank has already been through several cycles of transformation. Beginning our path as a market-oriented commercial bank on the legacy platforms of a formerly state-owned savings bank from the communist times, we launched a pivotal transformation in the 90s.
After years of successful growth and the first wave of international acquisitions, OTP decided to deepen its digitalization efforts, launching a large-scale digital transformation program in 2015. The next transformative wave arrived in 2019 when we launched a large-scale agile transformation in order to remain a market-leading bank in the digital age.
Q: What prompted this transformation process? What was the initial goal? Were you driven by any particular macro trends or competitive dynamics?
A: Our most recent transformation process has been driven mainly by the need to maintain the right level of speed and responsiveness to the market. Before the agile transformation, we too often faced a cluttered business and IT development agenda, and too many times, saw smaller competitors beat us to market entry with concepts that we had contemplated a long time before them.
Q: What does your competitive landscape look like in the transformation aspect? How do you position yourself against the competition?
A: As a large, universal bank, we see ourselves in a particularly competitive market spot, since in our many business lines we often face market players who focus 100% on a certain market niche. Their focused approach results in less extensive, yet often more targeted value propositions, providing a given group of customers with a better customer experience.
Our positioning now is changing, as we try to balance the width of our offering with the breadth of the digital propositions that we have been developing since our new wave of transformation started.
Q: What has been the impact of this transformation project so far? Can you specify what has changed and how?
A: The impact so far has been threefold. First, we saw a marked acceleration in the speed of our development from design and planning phases to development and feature release. Second, we have a much better understanding of our backlogs and the availability of resources at our disposal to complete these tasks. Finally, we saw a profound cultural change within the organization, with a much-improved ability to attract more diverse talent, and also, with a set of new practices transforming not only our ways of work but also our view of the customers.
Q: Are there any plans to include more business lines, or are there any future relevant transformation projects you can mention? What is OTP bank's vision for the future of financial services in this regard?
A: We started the transformation with one bank and three business lines, yet now we have expanded the transformation to several countries and more than a dozen business lines. The list is growing by the months, and it seems that the process can extend well beyond our initial plans.
Our transformation is buttressed by our vision of a profound change in the financial services market, as a place in a massive transition where the lines between businesses and sectors will blur, leading to a significantly tighter interaction among various banking and non-banking players focused on digital service delivery and seamless integration of these digital services.