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Fintech Nation: Hungary


Perhaps not the first place to be considered as a hotspot for fintech activity, Hungary and its capital, Budapest, are making headway in developing products and services for the country’s fledgling financial sector and beyond.

In spite of shaky infrastructure and remaining traces of its communist past, Budapest pulsates with tech activity. Approximately 500 registered startups grow and pivot in private offices or recently formed incubators. Their business plans, freshly inked, are modelled on the most successful international case studies in tech enterprise. On Facebook, groups of up to 15,000 freelancers bounce ideas, job opportunities and event details between each other. There seems to be a never ending flow of events for the startup crowd. One part instructive to two parts social, they offer a friendly point of entry into the feisty, entrepreneurial ethos which has increasingly become commonplace in Budapest.

Folded into the social gatherings, serious contenders find another caliber of high-visibility events. Euroskills, Budapest Hackathons, Blastoff Hungary and Hackathon-In-a-Box are among the events that offer an opportunity for contestants to flex their muscles in front of venture capitalists and potential employers. Each has become a huge human-resources success, where the likes of Morgan Stanley and BlackRock survey attendees for signs of quant genius. “Budapest plays a significant role as the key technological and analytic center of Morgan Stanley, to ensure the company stays among the leaders,” says Laszlo Hajdu-Nemeth, Morgan Stanley’s Executive Director.

Seeds of Success

The success of Budapest’s grassroots tech community can largely be accredited to one person: Hungarian entrepreneur and former INSEAD Business School professor Peter B Zaboji, a charismatic businessman with an international vision for his country. In 2008, Zaboji founded the European Entrepreneurship Foundation to host pep talks and angel mentorship meetings to instigate business growth. Widespread skepticism greeted his decision to hold meetings in English, the members’ weakest language, but he retorted that “the biggest room in the world is that for improvement”.

The momentum to create a hub picked up speed in 2010 when Peter’s invitation-only ‘First Monday’ meetings brought inspiration and knowledge in the form of founders, investors and bright minds. Seven years on, and the progress is impressive. From the entertainment industry to gaming and fintech firms specializing in machine learning, AI and cyber, there are few sectors that are not present. Hungary also has three unicorns to its name– Preezi, Ustream and Logmein – each a testimony that Hungarian-made products can appeal to the global market.

Some of the new startups are 100% Hungarian, but many are making the most of tech talent from neighbouring countries. “Budapest has become a viable incubation spot with a considerably mature investor community,” says János Pereczes, managing director of MKB Fintechlab.

“They [entrepreneurs] know that once they get here, it suddenly becomes easy to snowball into finding a co-founder, finding an engineer, finding funding…Such a wealth of talent spells opportunity for the Hungarian fintech landscape, which at the moment is in the earliest stages of growth.”

The Fintech Landscape

According to official reports, the Hungarian banking sector has 44 institutions, of which 26 are commercial banks, nine are foreign bank branches, five are mortgage banks, four are building societies and two are specialized banks. The five most prominent (OTP Bank, KBC, UniCredit Bank, Raiffeisen, and ERSTE) are responsible for more 50% of the sector’s total income.

Most large players now offer a mobile banking app to their customers. By way of alternative payment methods, the most popular choices are iCsekk, which allows for payment via QR code scanning; Buxa, for peer-to-peer money transfer and QRcode- based payments at selected stores; and Barion, an e-wallet enabling commission-free payments for goods and services.

However, according to a survey conducted by GKI, the Hungarian economic research institute, market penetration for mobile banking and payments is at a minimum, with less than 10% of the population having tested online shopping or payment apps.

One reason for such meagre take-up figures is that Hungary remains a cash-reliant economy. According to research by Deloitte, three-quarters of transactions in Hungary are realized in cash, with only 79.4% of the country’s adults possessing a bank account (in comparison to more than 85% in the UK).

For those seeking to extend fintech products in the Hungarian market and elsewhere, Budapest-based events such as the Fintech Summit and the E-Banking Summit now offer platforms for raising awareness. However, perhaps more important are smaller events such as the Fintech Banking Summit and Beyond Banking, which allow C-level bank and tech leaders to discuss the issues and possibilities of a modern financial landscape.

Questions over what the future holds come from all angles. Concerns include banks spending 70% of their IT budgets for compliance development with no clear rules for the future, or the need for additional government support.

For a modern fintech landscape to develop in Hungary, the consensus is that the government and Hungarian National Bank should continue to re-evaluate policies and strategies; that plans should be tailored to digitize services in segments that are feasible; and that companies of all sizes should work to increase communication and trust channels with customers.

“The evident breakthrough in communication on a corporate level is the most impressive, and auspicious detail,” says Tal Sharon of fintech consultancy firm Equitech. “Now is the time for fintech providers to start thinking about Hungary.”

HUNGARIAN TECH ACHIEVEMENTS, the online document creation tool, has 45 million users globally and attracts 55,000 new users every day. It has raised a total of $15.5 million. is a live video streaming service hosted on a cloud platform. Popular with Panasonic Samsung, Logitech and CBS News, to name a few, it raised $11.1 million in Series A funding, and is now owned by IBM Cloud Video. is a cloud-based remote connectivity tool that has been on NASDAQ since 2009 and valued at $1 billion since 2017.

Hiflylabs provides consulting, project management and implementation in the fields of business intelligence, data warehousing, data mining, data science, dashboard building and custom application development.

NNG LLC, formerly Nav N Go, is a leader in navigation & GPS systems. Founded by Peter Balogh, winning the Hungarian Innovation Grand Prize for its software, iGO Automotive. It has offices in Switzerland, Hungary, India, Australia, Israel, China and the US., is world’s first automated sign language translator which, using a webcam, depth sensor and a computer, allows hearing-impaired people to communicate.

Seon helps with fraud detection and fraud repair. The platform serves more than 300 merchants and is estimated to have saved businesses around €10 million so far.

Mr Coin, Hungary’s first online Bitcoin exchange and ATM, was a leading European invention that, to date, has processed transactions of more than €4.8 million.

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