Economy 18:56 05/11/2018

Armenia’s banking sector has not seen defaults for 16 years head of Ameriabank division says

In an interview with “Bankovskoye Obozreniye” (Banking Review) Hovhannes Khachatryan, head of Assets, Liabilities and Capital Management Division at Ameriabank, speaks about what makes Armenia’s banking sector different from that of Russia, what kind of technologies make it move forward and what are Ameriabank’s market consolidation plans.

- Hovhannes, what are the distinctive differences between banking in Armenia and Russia?

- The first difference is that we have no state-owned banks in Armenia. All the banks are privately owned. This is why the competition among them is very tense. There are also international players here such as HSBC, VTB, Credit Agricole, etc. Nevertheless, local banks successfully compete with them, and Ameriabank, as a private local bank, has been holding the lead for many years. 

Secondly, Armenia’s bank regulation is much stricter. It has been instrumental in helping local banks avoid defaults over the past 16 years. After a period of "cleansing" in the late 90s and the first years of the new century, the regulation became even more stringent. Our market is more liberal than the Russian one - for example, we have no currency control.

The reluctance of local banks to finance large government infrastructure projects can be viewed both as an advantage or disadvantage.  In this sense local banks are less exposed to risks. In terms of technology development, if we look at the leading Russian banks, they are more advanced and we still have a lot to learn. This is probably because of a conservative approach shown both by the country's leadership and, in some cases, the leadership of different banks to all sorts of innovation.

- Are there any special relation between the banking sectors of Russia and Armenia?

- We have good partnership relations with colleagues from Russian banks. But despite the fact that the economies of our countries are mutually integrated, I would not say that the Armenian and Russian banking sectors interact strongly with each other, not counting VTB that has a small retail banking presence in the Armenian market.

- As regards technology, Softline has built a data processing center for Ameriabank this year.  What banking services will it be used for in the future?

-Today, the banking sector is undergoing a fundamental transformation: it is obvious that banks are not going to limit themselves to selling financial services only. For example, the Russian Sberbank is positioning itself as a platform for clients who can use a huge number of services through the so-called one stop window. The task of the bank is to offer the clients the services which they most likely will buy. To do this, banks apply business analysis, artificial intelligence and other related technologies and approaches.

The banks have accumulated a huge amount of data. We see and understand the need for fast and complex processing of this data, because we are aware of how things will be unwrapping in the future. Of course, this primarily concerns retail products, online lending, more advanced mobile banking solutions or other distance channels. Now it is important for a bank to be able to work with the existing data, be able to enrich the data by using information from different sources. In turn, this imposes new requirements in terms of working with data, applications used for their processing and the performance of computing and network equipment.

Large amounts of data can also be used for marketing decisions, for determining credit limits; by using these technologies, one can improve scoring cards, etc. The infrastructure, which the new data center offers will help to realize all this. When we ordered this project, we asked the consultant to create such a data center that would enable us to have at least three to four years of supplies in terms of equipment, engineering support and network capacity.

- Now, the loan decisions are automated, aren’t they?

- Partially. For some products, human participation is absolutely unnecessary. We want more decisions to be taken automatically and extend this practice from individuals to small and medium-sized businesses. The experience of our colleagues - including that of bankers in Russia - shows that advanced scoring algorithms not only eliminate the human factor (as part of automation process, this is obvious), but also reduce the risks for the bank.

- Can you call information technology an important competitive factor?

- They are not yet an important competition element in our market. Nonetheless, it is the clients, who, based on their needs and everyday life habits, dictate the terms to us. If earlier the banks had to exert efforts to make the clients use some technologies, now the client is the one demanding innovations, since our customer base is younger and more competent in the technological sense.

For them, especially for the younger generation, all these mobile applications, online banking, p2p transfers are an obligatory part of banking services, although some of the local banks, especially small banks are not in a hurry to invest in technology, since these solutions are too complicated, expensive, and do not always pay off. But the future is for the new technologies, and the banks that lag behind will not be able to obtain all the diversity of the latest technologies in one day. We need to constantly work on banking IT and grow with customers to the level that awaits us in the next, say, ten years.

- The European Bank for Reconstruction and Development (EBRD) owns a share in Ameriabank. Does this have an impact on Ameriabank in one way or another?

- In addition to the European Bank for Reconstruction and Development, the Asian Development Bank has also obtained a share in our bank since February 2018. These lending institutions are of great importance for local financial markets, such as the Armenian one, since they set high standards that need to be met not only in order to be credited, but also, in the best cases, to have a share in the authorized capital. These are high risk management standards, public financial reporting, corporate and social responsibility. And even if they do not directly teach us, we just have to constantly raise our level and keep these standards based on their requirements.

And since our bank plans to conduct an IPO on well-known international markets in the near future, this is precisely the regime of transparency and discipline in which we are accustomed to working together with these organizations. Sometimes they arrange the exchange of information with other partner banks. We often receive guests from Russian, Central Asian and other banks, and our specialists pay reciprocal visits to these financial structures. We are in a constant learning process, and the EBRD and ADB provide this exchange of experience.

- Does Ameriabank plan to somehow expand its presence to other countries?

- We have never hidden our ambitions to enter the Russian and Georgian markets. There were real attempts, but, unfortunately or fortunately, they were not crowned with success, and we concentrated our forces in Armenia. And it worked - we have been leading in the corporate sector for many years holding now almost a third of the market here. Now we are actually becoming the leader in the SMEs and retail segments. It should be noted that Armenia’s market opportunities are very limited. On the other hand, our country's economy is less volatile and more predictable in the medium and long terms. However, nothing can be ruled out. After the consolidation in the Armenian banking sector is over, over in our favor, we will be able to redistribute our resources and begin foreign expansion. We will probably return to this issue soon.

- In Russia, banks often enter other markets, including non-banking ones. Does Ameriabank move in this direction?

- We are a financial organization, and our competencies and strengths are concentrated in the financial sector. We now have no plans to try something else. Although theoretically, in one form or another, I do not rule out attempts to enter non-banking markets. But, again, we will not use our resources to create something that we know little about. There is a hypothetical synergy of financial and some non-financial organizations, say, telecoms. This is not necessarily a merger; there may be close cooperation. But for the present we are fighting for absolute leadership in the financial sector.

- What is the share of remote channels now? What is the prevailing trend among customers- visiting a bank branch or RBS?

- One third of all bank customers actively use our mobile application or internet banking. One part (25%) is very active, another part is active in controlling the status of their accounts, receiving references and so on. But this figure is growing very fast. In terms of using remote channels by legal entities there are still no good specialized solutions in Armenia. For large companies, this issue is not urgent. A large number of small and medium businesses has real needs for RBS, and we our task is to meet them as quick as possible.

The source: “Bankovskoye Obozreniye”



Source Panorama.am
Share |
Տեքստում սխալ կամ վրիպակ նկատելու դեպքում, ուղարկեք խմբագրին հաղորդագրություն` նշելով տվյալ սխալը, այնուհետև սեղմելով Ctrl-Enter:

Newsfeed

17:03
Raúl among potential candidates for Armenia manager
Raúl is being considered among the potential candidates for the new head coach of Armenia’s national football team, Armen...
16:46
Putin reiterates Russia's commitment to normalizing Armenian-Azeri relations
Moscow is doing all it can to help relations between Azerbaijan and Armenia to normalize and sees these countries as its natural strategic...
16:30
Colder weather ahead in Armenia
Clear weather is expected in Armenia’s regions on Tuesday and in the next few days. Strong winds of up to 25 m/s are forecast for some...
16:12
Nearly 58% of survey respondents dissatisfied with Pashinyan's performance
According to a Gallup International Association survey, nearly 58% of respondents are dissatisfied with Armenian Prime Minister...
15:31
Global prayer for Armenian hostages in Azerbaijan on the eve of COP29
On the initiative of His Holiness Catholicos of All Armenians Karekin II, an ecumenical (global) prayer for peace and justice in Armenia and the...
15:15
Putin receives credentials from new Armenian ambassador
Russian President Vladimir Putin on Tuesday received letters of credence from 28 newly arrived foreign ambassadors, including Armenian...
14:43
Azerbaijan has no plans to leave Armenian territories, MP claims
MP Tigran Abrahamyan of the opposition Pativ Unem faction has called attention to the discussion on the sequence of border sections for...
14:05
Georgian travel agency deletes post on Armenia's Lori, unavailable on president's page
Georgian travel agency Adjara Voyage has deleted its social media post describing Armenia's Lori Province as “historical...
13:35
EU officials visited Armenia for visa liberalization talks, deputy FM says
EU officials have travelled to Armenia for visa liberalization talks, Deputy Foreign Minister Paruyr Hovhannisyan said on Tuesday....
13:15
Greta Thunberg boycotts COP29 in Baku
Swedish climate activist Greta Thunberg has announced her decision to boycott the upcoming COP29 climate summit, set to take place in Baku,...
12:59
UN court to deliver judgment on Armenia v. Azerbaijan case on November 12
On Tuesday 12 November, the International Court of Justice (ICJ), the principal judicial organ of the United Nations, will deliver its...
12:33
Opposition MP asks to postpone independence declaration debates
Opposition Hayastan faction MP Gegham Manukyan on Tuesday asked a parliamentary committee to postpone debates on a statement defending...
12:03
Senator Markey: COP29 should be used to hold Azerbaijan accountable for war crimes
U.S. Senator Ed Markey insists that COP29 should be used to hold the Azerbaijani government accountable for its war crimes....
11:34
Armenia appoints new justice minister
Srbuhi Galyan has been appointed Armenia’s new justice minister. President President Vahagn Khachaturyan signed a relevant decree...
11:15
Iranian leader to attend COP29 in Baku
Iranian President Masoud Pezeshkian will attend the COP29 UN climate summit in Baku, the Iranian Embassy in Azerbaijan reported....
11:02
Armenian ambassador says he received death threats from Azeri counterpart in Brussels
The Armenian Embassy has lodged a formal protest with other diplomatic missions in Brussels after its ambassador claimed to have been on the...
17:02
Footballer killed by lightning strike at match in Peru
A football player in Peru has died and more have suffered injuries after being struck by lightning during a match on Sunday afternoon, the Daily...
16:46
On the trail of a post about Lori shared by Georgian president
Georgian President Salome Zourabichvili shared on Facebook a post by a Georgian travel agency offering tours to Armenia’s Lori Province on...
16:05
Parliament speaker names ruling party's candidate for Gyumri mayor
Armenia’s ruling Civil Contract party has picked Karen Sarukhanyan, a former governor of Shirak Province, as its candidate for the next...
15:42
Pashinyan criticized for failure to congratulate Moldova's president on re-election
Artur Sakunts, a human rights activist who heads the Helsinki Citizens' Assembly-Vanadzor, on Monday criticized Prime Minister Nikol...
15:07
Car crash in Armenia leaves one dead, three wounded
A tragic car crash in Armenia’s Aragatsotn Province on Monday left one person killed and three others injured. The Rescue Service...
14:36
Yerevan mayor says his 'good looks' could make him a target for corruption rumors
Yerevan Mayor Tigran Avinyan denied allegations of corrupt practices involving him as defamation.  “I guess my good looks...
14:14
Putin to accept credentials from new Armenian envoy on Tuesday
Russian President Vladimir Putin will receive the letters of credence from 28 newly arrived foreign ambassadors, including Armenian...
13:45
Legendary music producer Quincy Jones dies at 91
Quincy Jones, a titan of American entertainment who worked with stars from Frank Sinatra to Michael Jackson and Will Smith, has died aged...
13:30
Rain expected in some parts of Armenia on Monday
Rain is forecast for some parts of Armenia on Monday, with snow set to hit the country’s mountainous areas. Clear weather is expected...
13:04
At least 10 killed after volcano erupts in Indonesia
At least 10 people have been killed after a volcano erupted in eastern Indonesia in the early hours of Monday, BBC News reports, citing local...
12:46
ICRC visits Armenian prisoners held in Azerbaijan
Employees of the International Committee of the Red Cross (ICRC) visited Armenian prisoners held in Azerbaijan in October this year....
12:26
Spanish king pelted with eggs in flood-hit Valencia
Angry residents booed and threw eggs at Spain’s King Felipe and Queen Letizia as they visited the Valencia region, where more than 200...
12:10
Political analyst: Azerbaijan sitting on the twine
Political analyst Stepan Danielyan has weighed in on the latest developments regarding the Ukraine conflict. In a social media post on...
11:35
Tatoyan Foundation working to expose Azerbaijan's lies about Artsakh
Specialists of the Tatoyan Foundation are doing extensive work to expose the false Azerbaijani narratives about Armenia and Artsakh...

Follow us and get updates!

Most popular articles

{"core.blocks.header.spell_message1":"Selected mistake: ","core.blocks.header.spell_message2":"Send a message about the mistake?"}