Analysis. Companies and cities in Romania navigate digitalization challenges and opportunities

Georgeta Gheorghe 15/05/2017 | 07:45

For private firms and the public sector alike, the road to digitalization is dotted with challenges, from mentalities to raising funds to support projects, but, more than that, with business opportunities, especially when it comes to public-private partnerships, such as those designed to create smart cities. 

By Georgeta Gheorghe


According to Adrian Floarea, certSIGN director general, a major obstacle to digitalization is mentality. “We are trying to provide business models that no longer require the use of paper, based on the ‘go paperless’ concept. From our point of view, the main issue is changing the mentalities of all a company’s employees. In this process nobody is at fault: this is the mentality; this is how things have been so far and it is difficult to make the change,” he said earlier this month. However, Floarea is confident things will move in the right direction, although perhaps not within a predictable timeframe. “We are on the right path, but there is a long way to go until the number of companies that digitalize their businesses will grow,” he added.

However, players argue that some sectors are bound more than others by industry rules when it comes to the speed of adopting technology and incorporating digitalization into their operations. Banking industry representatives argue that the very nature of lenders’ activity, based on strict regulations and careful risk management, prevents them from adopting the latest digitalization trends. “Banks are highly regulated because they are very big. That is why risks of blockages or fraud have immediate effect and a very big impact. As a banker, you are somewhat bound by regulations, because banks do not have the freedom of the research engineer who is not tied up by laws,” said Florin Danescu, executive president of the Romanian Banking Association (ARB).

Nevertheless, the public is very responsive to digital initiatives, and could be a driving force. “The potential to influence via this channel is very big. We are a bank, but we want to become a digital company. One thing we notice is that, if we build something on this digital channel, people come over. They buy directly the products we put up there,” said Vlad Stanilescu, ING Bank’s head of digital platform development. Moreover, more than 90 percent of interactions with the bank’s clients are conducted via digital channels, he added. Despite that, there is also progress to be made with bank customers. According to Stanilescu, among clients who use mobile banking services, the most common operation is balance checking.

State must play active role in digitalization

According to akamai’s state of the internet Q1 2016 report, Romania leads the European region when it comes to average peak connection speeds, at 82.4 Mbps. Moreover, the country was ninth in terms of average European connection speeds, and 14th globally, and marked a 4.2 percent increase in internet connections that met the 4 Mbps broadband speed threshold, coming tenth in the Global 4 Mbps broadband adoption raking. According to data provided by Eurostat in February 2017, 71 percent of internet users in Romania went online daily. These are good premises for increasing access to digital public services. Speaking about the efforts of Romania’s public sector to digitalize some of its functions, the minister of communications, Augustin Jianu, said that interaction with the state is a basic need, which the latter must make easier. According to the minister, the systems built so far have not answered any of the public needs.

“Not all of the systems are terrible. Some of them work, and we must see how we can use them and make them more user friendly,” said Jianu, acknowledging that the state has a significant role to play. “The market cannot move at the pace digital technology offers unless the state also makes a change.” He mentioned two future initiatives: alongside the launch of a ‘digital alphabetization’ program aimed at the general public, the ministry he heads will create an Agency for Cloud and Digital Services.

Smart cities, a beacon for public-private digitalization partnerships

Public-private partnerships (PPPs) are more efficient in bringing digitalization forward, Jianu argued, as private operators are more interested in a project when there is a financial contribution. Telekom Romania and Philips representatives speak of plans to develop initiatives with local authorities.

According to Razvan Ionescu, segment business marketing director at Telekom Romania, the company is currently in talks with the local authorities in several cities around the country interested in implementing the smart city concept. The firm’s interest in this field is clear, Ionescu said, adding that he believes that this year will see many smart city projects in Romania, and that the end of the year will bring large-scale projects. According to him, Romania should strive to integrate this type of projects in order to reap the benefits. “Although we have been speaking about smart cities in Romania for two years now, and there are already concrete projects, Romania hasn’t yet reached the integration stage,” said Ionescu. According to him, the main benefits integrated smart city projects bring come from their functioning together.

Philips Lighting’s CEE general manager, Bogdan Balaci, also spoke of increased integration and called for lighting in public and private spaces to connect to IT networks and telecommunications. “Once lighting systems, such as street lighting, facade lighting, those for the industrial and retail sector and office spaces as well as for households, connect to the IT and telecommunications networks, they will slowly become smarter,” he commented.

Currently, he argued, there is a lack of awareness among local authorities as well as at central authority level regarding the benefits integrated smart city projects can bring to cities. Also, more should be done to raise awareness surrounding the business opportunities such projects create for the local community.

Moreover, according to Ionescu, there is an underlying problem surrounding the funding of the type of projects the Romanian authorities should address. So far, smart city pilot programs have been funded mainly by private companies, he commented, and urged the authorities to use their resources to attract alternative funding, for instance EU resources.

There has been progress in attracting funding, however, argued Nicolaie Moldovan, city manager at the City Hall in Alba Iulia, the first smart city in Romania, developed with Orange Romania. According to Moldovan, despite having started small, the fundraising team at Alba Iulia City Hall currently numbers 34 people, 7 of whom are working to attract funds for the smart city project.

Another incentive for introducing smart technologies to cities is the fact that the funds invested can be recovered in under ten years. According to Philips’ Balaci, the cost of implementing smart lighting systems in cities, for instance, can be recovered, through the savings it brings, over five to seven years.


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