As a response to the coronavirus pandemic's possible crisis-enabling effects on the economy, the Hungarian National Bank issued the Hungarian Financial Institutions in March 2020 to introduce a loan repayment moratorium mechanism for all debtors (corporate and retail also) which allowed the delayed payment of the instalments causing an altered, non-standard mechanism for loan amortization. The new mechanism meant a huge challenge for banks, obliging them to reach out all debtors with several opt-out and opt-in declaration possibilities, finding a new way how to work with the new amortization methods while being able to roll-out the solutions within a very tight deadline. Advocate consultants were helping many financial institutions in Hungary by leading and participating in projects with the sole scope of implementing the new changes.

Challenges in a changing work environment

The above mentioned posed multifaceted challenges, not just because of the obligatory requirements, but because of the emerging global health crisis which had to be tackled almost immediately by radically changing the work environment.

With the introduction of the work from home method, initially it was very hard to lead a successful a project, but our Advocate project managers had expertise in working within these circumstances. With major and not-so-major changes in the daily work (multiple daily standups and instant video calls) the newly formed project teams were able to act quickly and operating with beter-than-expected efficacy.

Regardless of the Financial Institution’s chosen project management approach (whether it was agile or classic waterfall), the work from home-related issued must be tackled in order to be able to roll-out the necessary solutions.

Non-standard way of loan amortization

Since the loan repayment moratorium mechanism fundamentally altered the way how an annuity loan should be repaid and the lending systems used by the banks were designed to handle the standard loan amortization schedules, new solutions had to be defined. Within the tight deadlines it was possible to introduce new technical accounts in the Core Banking Systems that were responsible for "collecting" the repayments that were not paid (these amounts are meant to be repaid with 0% interest with the same duration as the original loan).

Simultaneously, the loan repayment schedules were modified in the Lending Systems by extending the maturity date with the months the debtor was participating in the moratorium mechanism. With these two parts (the "moratorium due" account balance to be repaid and the modified maturity of the original loan deal) the Core Banking part of the projects were carried out as quickly as possible (not surprisingly, most of the Hungarian banks came up with a solution like this).

Opt-in and opt-out choices for debtors

During the first phase of the mechanism, an opt-out method had to be provided to the affected debtors which was overridden by an opt-in method in the beginning of the second phase of the loan repayment moratorium. That posed an extreme challenge for both the branch operations and the contact centers (working hours for direct client contact were shortened because of the involved health risks), therefore the only available customer facing channels were the electronic ones (Internet and Mobile Banking solutions).

Because of PSD2-compliancy, all of the Hungarian Banks had at least one digital channel (either a desktop Internet Bank or a Mobile Banking solution) available, but for most of the cases, the secure online authentication for providing a legally binding statement was not possible without further developments. Several Advocate consultants are working in the domain of electronic channels, therefore our consultants had several hundred years of combined work experience in the field. Because of this competitive advantage several Financial Institutions chose Advocate consultants for the following:

• detailed specification of the to-be implemented workflows, processes
• UI wireframes for all screens and processes
• define, renew and implement authentication/authorisation rules

How the multifaceted challenges were tackled

It is clear now how many challenges were needed to be handled during a project with the scope of rolling out the loan repayment moratorium. Fortunately, Advocate consultants were able to lead and participate in those projects working in several roles:

• Core Banking consultants: our consultants made sure the implemented solution was not over-developed, used the tools that were already available within the notoriously rigid and hard-to-configure Core Banking Systems.
• E-channels consultants: the main focus of our consultants was the raise awareness in the stakeholders that investments in the digital channels has become a must and many debtor-related communication obligations could be met effectively through the online channels.
• Project managers: our project managers successfully able to lead the projects in a radically changed work environment which also required them to think outside the box by showing more empathy and trust in the project members.

Although our consultants were working for several Hungarian Financial Institutions, the challenges were almost universally the same which required more or less the same approach. But by providing carefully planned project timelines, thoroughly analysed requirements and clear specifications, Advocate consultants were able to help tackle those challenges for every client - within time, within budget.