Our company, Online Zrt., started the introduction of the Hungarian State Treasury's new account management system on 17 February 2020, as a subcontractor to 4iG Nyrt. (4IG.BD). The Account Management System was introduced in two phases. As a result, the cutting edge financial services offered via the Account Management System have been available for all of the Hungarian State Treasury’s partners since 1 January 2022.
The Hungarian State Treasury is the nation's largest financial institution: it manages HUF 28 trillion (approximately EUR 68 bn) in budgetary sources and transfers to 2.5 million pensioners and 1.3 million families every month. In 2021, the total amount paid for these benefits exceeded HUF 5,000 bn (EUR 12 bn). In addition, the Hungarian State Treasury is also responsible for the payrolls of more than 900 thousand citizens and manages one of the country’s largest investment portfolios, comprised of approximately 520 thousand state securities accounts. The Hungarian State Treasury performs its tasks with a vast apparatus: it is an enormous institution with county agencies and an organization with numerous levels of management that employs more than 6000 people.
Although the Hungarian State Treasury’s IT systems were reliable and made the necessary transfers every month, the software programs being used were so old – including some that had been used since 1997 – that they were understandably not ready to meet the new challenges of the financial world. For example, the ability to access financial services over the internet has become a fundamental expectation, and with the introduction of the Instant Payment System (Azonnali Fizetési Rendszer, AFR) transactions have to take place between financial institutions within a manner of seconds. As the aim of the government and the Hungarian State Treasury is to provide citizens with high-quality financial services, the replacement of these outdated software components has become unavoidable.
The replacement of the account management system was implemented with the involvement of Union funds as part of the “The 21st Century Family Support, Pension, and Treasury Account Management System” (KÖFOP-1.0.0-VEKOP-15-2016-00024) project, which in addition to account management, also replaced and implemented several other IT solutions, with the Treasury responsible for project coordination. In the project, we, as a subcontractor of 4iG Nyrt., were responsible for the development of the following main functions:
To implement the client front-end and the back-office account-keeping system, we relied on the experience gained in the development of our DigiTie and MoonSol systems, respectively (https://www.online.hu/solutions). The development of the client front-end and the back-office together form the Hungarian State Treasury Account Management System (SZR), which is one of the central elements of a complex solution consisting of several systems. With its introduction, the Treasury aimed to implement the best practices already used by financial institutions.
The Account Management System introduced modern methodologies such as workflow process-based operation, a robust central transaction system, easy-to-generate reports and documents, and easily manageable, transparent administrator and client front-end interfaces. Moreover, the system can also be flexibly developed and parameterized, including in part by users, who can even parameterize new products independently.
SZR client front-end
The client front-end layer of the Account Management System allows clients to be served through multiple channels (personal and electronic). The client interface is accessible from a browser without the need to install a separate application. This online front-end interface provides clients with the functions of a modern digital bank: they can use it to manage their financial transactions (using all domestic and international payment system connections), query the results of previous transactions, and download statements and reports. In addition to financial services, the interface also provides access to the special functions required by the various technical systems. The client front-end interface goes a long way in unburdening Treasury administrators. In the course of administrative tasks carried out in person, administrators at the State Treasury’s branch offices (called State Treasury Offices) use the account opening, account modification, and cashier modules.
SZR back office
The Account Management System uses an intermediate layer (ESB) to communicate with the budgetary system, serves the repository’s data needs, posts analytics to the general ledger system uses the central client records in line with the separate functions (regularly updating its client database), and starts and receives transfers.
Institutions are provided by HUF and foreign currency account management services, which can be managed via electronic channels and at cash desks. The new Account Management System allows the Treasury to introduce new, faster, and safe workflow processes for batch transfers. In the first half of the year, the system’s capacities were tested by several payment batches containing a large number of items: the Treasury was able to process these successfully.
Institutions mainly launch batch transactions in the direction of their clients, such as the transfer of wages, commissions, pensions, benefits, and personal income tax refunds, which are most easily initiated in bulk by uploading files from the technical systems. The online interface can be used to upload files, uploading a number of different transfer types simultaneously, as the system automatically recognizes the correct type and performs the transaction accordingly. Transactions take place after multi-tiered approval: both login and transfers require strong user authentication.
Transfers are generally received one by one on the receiving side, where payments often have to be made by a prescribed deadline, in which case payments are usually made in large numbers on the deadline, such as company and personal income tax payments and student loan installments. If the received amounts are under the limit set by the regulator (currently set at HUF 10 million for transfers), incoming transactions are received by the central system managing instant transfers/receipts (GIROInstant), provided by the Hungarian Central Bank. The Treasury generally uses the InterGilRO1 clearing system, which performs forward-dated transfers with night-time clearing, and the InterGIRO2 clearing system, which provides clearance 10 times during the day. The Account Management System meets the conditions of the GIROInstant system mentioned above and is suitable for using all functions it provides: it is available 24/7/365 for incoming and outgoing HUF transfers, performs shadow accounting (in the case of the client front-end), and uses secondary identifiers to start transfers (reference to a phone number, email address, tax number, and the provision of these identifiers by institutions). The management of the currently not required “payment request” function is under testing; when it will be able to both send and receive payment requests depends on the Hungarian State Treasury’s decision.
Compared to the previous system, an essential step for Hungarian State Treasury clients is that while the earlier special formats are also retained, statements are prepared in a modern, ISO-compliant format based on the client statements suitable for electronic processing, which supports the introduction of new processing technical systems.
During the course of implementation, we strived to use standard interfaces wherever possible (e.g. clearing channels), and where new interfaces were needed, we used modern standards and solutions. Accordingly, the general use of the ESB framework system, XML-based communication, and the use of ISO standards between participating parties and sub-systems was crucial. As regards security, the Account Management System meets the significantly more stringent requirements set by the Treasury, which are regularly tested and developed.
Features of the Account Management System in numbers:
The Account Management System between 01.01.2022. and 30.11.2022. handled HUF 48,000 billion in traffic, which means 87 million sent and received transactions. This is nearly 13% of clearing turnover in Hungary. In terms of turnover value, the Treasury ranks 2nd among clearing members.
The project has led to the creation of Hungary’s largest account management system.
Is that the end of the job?
Not at all.
The implementation will be followed by the implementation of the thousands of ideas that may not fit into this project's timeline but are necessary for the Treasury to provide the most modern services to its clients.
We are committed to developing and introducing 21st-century solutions for our clients. We are ready to provide assistance regarding the back and front offices, whether the client in question is a greenfield financial institution or a market player with hundreds of thousands or millions of accounts.
Contact us to request a free consultation where we will help you develop an IT support concept that best meets your needs!