Development of Banking Industry in Hungary

Abstract: In the last two decades banks faced new challenges. The paper analyses the convergence of financial intermediaries in terms of business area development and service innovation, focused on banking companies. The concept of bancassurance is not clearly defined neither in theory nor in practice. Banking industry development can also be determined from a functional and an institutional point of view. Functionally means the range of financial services and includes the banking and insurance services. The institutional approach is based on the organisational cooperation between banks and non-bank institutions. Based on Hungarian national data, we find that the penetration process, so the entry into insurance services – primary targeted life insurance services - industry is mostly driven by banks in Hungary.