2-Year Fintech Challenge: Croatia’s Kuna-to-Euro Conversion Project

The Croatia HRK to EUR Conversion Project has impacted all businesses in Croatia, and the financial sector was naturally one of the most affected.

For banks, a conversion such as this was a huge and complex project which has never been implemented on such a scale in Croatia.

Any remotely comparable project could be, for example, a new business core solution, implemented big bang style – all functionalities at once.

Hundreds of people worked on the project directly and hundreds more indirectly. There were more than 2000 IT-related issue types opened in JIRA. Change requests, various tasks, bugs etc.

But before we get into all of this, here is some banking lingo so you can differentiate between the stakeholders.

Clients are Corporate and Retail entities that buy a bank’s products and services.

End users are bank employees who use the bank’s apps. Some of them are cash tellers, personal bankers, back-office staff, call center agents etc.

To show you the bigger picture of just how huge this impact was, here we have listed the more heavily affected parts of the organization:

  1. LEGAL – adjusting to new regulatory standards, contracts and laws.
  2. REPORTING – all reports for clients were supposed to be expressed in dual amounts, in HRK and EUR. Creating and sending special customized notices regarding conversion as well. Other reports, for example, regulatory reports for HNB had to be adjusted as well.
  3. ORGANIZATION PROCESSES – adjusting front and back-office processes and re-writing rulebooks. For example, the EUR account was no longer a foreign currency product, therefore new accounts had to be opened for different product types, on different principal GL accounts, with different contract wording etc.
  4. GENERAL LEDGER (GL) – adjusting to changes from the central bank for all clients and bank accounts.
  5. CASH MANAGEMENT – collection and disposal of HRK banknotes and coins, as well as the distribution of EUR banknotes and coins – in the Treasury, cash registers, ATMs…
  6. BUSINESS DECISIONS – creating in-house decisions and rules on the HRK/EUR adjustment of interest rates, fees and other operative adjustments (for example the old EUR product groups had to be disabled, and new product groups were supposed to have the characteristics of the HRK product groups).
  7. BUSINESS PARTNERS – institutions with whom banks interact operatively – for example, various data and transaction files exchange with FINA, HZMO, HP.
  8. APPLICATIONS – all applications needed to be changed to various degrees, including the front-end, back-end processes and batches, interfaces, schedulers etc.
  9. THE CLIENTS – from the client side, the conversion needed to be smooth and minimal, simple and clearly communicated. Clients needed to be fully aware that they will have new balances in a different currency, in a different amount but on the same accounts and that their legal contracts will be unchanged and applying.

OK, so everything and everyone was affected. Now let’s get back to our yard.

How was the application adjustment done if we look at the IT part?

Below you can find the most important IT changes made:

  • Client applications (for example internet/mobile banking) had a dual currency display added; the history of HRK transactions was merged with the EUR transaction history to have continuity.
  • End-user applications – minor changes were made in front (like mapping old-new accounts, displaying all foreign amounts in EUR instead of HRK etc.). Bigger changes were made in back-end services, batches and databases.
  • All entity types (batch jobs, functions, services, procedures, views etc.) were scanned and reviewed and if there were hard-coded values, or logic specific for handling HRK and EUR currencies differently, needed changes were done
  • Procedures were made to:

-> convert analytical data in the database, for example, accrued undue interest

-> implement the same characteristics as on the HRK account, for example, invoice delivery channel, freeze status, tax rate

  • Product portfolio conversion – this is the most important step from the client’s perspective – new EUR accounts were opened, with the same characteristics as the old HRK accounts. Funds on the HRK accounts were converted to EUR per a fixed rate and then transferred to EUR accounts.

For deposits and loans, since they have a (re)payment plan which was ongoing on 01.01.2023., new accounts were opened starting from a date in the past (back value date), taking the date from the last deposit renewal or last loan rescheduling.

For example, the term deposit has a balance of 75.345,00 HRK. The frequency is 12 months, the deposit is due on March 1st, 2023. A new EUR deposit is opened on March 1st, 2022 with the same frequency and due date, and the amount of 10.000,00 EUR was credited to the account.

When thinking about changes, IT mostly focuses on IT system adjustments.
But so much more than that was impacted and all departments had to collaborate closely so that the project could successfully sail to production.

So this was a glimpse of work on a two-year Croatia HRK to EUR Conversion Project with a fixed production date and no possibility of postponement. Production failure wasn’t an option, so rollback scenarios weren’t even made.

Now that you’ve read this, maybe you would like to know more about the business analyst role.
Read more here:

Leave a Reply

Contact Us