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

18:46 • 05.11.18

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”


LATEST NEWSAll Today news

15:33 • 11/12

Khashoggi murder: Turkey in talks with UN for investigation

14:58 • 11/12

NASA’s newly arrived OSIRIS-REx spacecraft already discovers water on asteroid

14:49 • 11/12

Election results ‘obliging success’ for winner, says outgoing parliament’s speaker

14:05 • 11/12

December 9 snap elections 'resulted in no surprise' - opinion

13:09 • 11/12

US urges European nations to exit Nord Stream 2 project

12:51 • 11/12

Armenia’s Conservative Party calls for ending ‘pre-election rhetoric’

11:57 • 11/12

Arabs ‘in talks’ with US for NATO-style security pact

11:52 • 11/12

Queen’s ‘Bohemian Rhapsody’ named most-streamed song from 20th century

11:42 • 11/12

Man Utd not to sell Pogba in winter  

11:04 • 11/12

Russian Tu-160 strategic bombers land in Venezuela after 10,000km transatlantic flight 

10:58 • 11/12

Trump ‘concerned about being impeached’

10:28 • 11/12

Germany's Merkel congratulates Pashinyan on successful conduct of snap elections

10:16 • 11/12

EU reaffirms commitment to Armenia's to democratic and prosperous future

10:10 • 11/12

UK's May postpones Brexit deal vote

09:55 • 11/12

US hails snap parliamentary elections in Armenia

09:25 • 11/12

France protests: Macron promises wage rise

18:24 • 10/12

Armenia’s new parliament to have 132 seats to secure opposition’s presence

17:31 • 10/12

Isha Ambani wedding: Beyoncé and Hillary Clinton jet to India for celebration

17:22 • 10/12

International observers praise free conduct of December 9 snap elections in Armenia

16:36 • 10/12

Russia becomes the second largest arms producer in the Top 100

15:59 • 10/12

December 9 snap election ‘reflected Armenian voters' collective will’, say local observers  

14:58 • 10/12

Catherine Zeta Jones and Cameron Douglas lead tributes to Kirk Douglas as acting legend celebrates 102nd birthday with wife Anne, 99

14:36 • 10/12

Armenian CEC finalizes outcomes of Dec. 9 snap election: Pashinyan’s bloc leads with record- breaking 70.44%

13:14 • 10/12

Pashinyan will face reality check – Armenia’s snap election attracts wide coverage by intn'l media

12:24 • 10/12

Ex-Nissan chief charged with financial misconduct

11:46 • 10/12

Syrian soldier killed in latest attack by jihadist rebels in Aleppo

11:30 • 10/12

Adam Schiff says Trump faces ‘real prospect of jail time’ after leaving office

11:16 • 10/12

Jamal Khashoggi's last words ‘disclosed in transcript’

11:03 • 10/12

Artsakh president issues congratulatory address on Constitution anniversary

10:13 • 10/12

Parliamentary election 2018: Pashinyan’s bloc secures landslide victory

09:31 • 10/12

Venezuela accuses US of plotting against President Maduro

17:48 • 09/12

Avengers: Endgame trailer beats Infinity War's record for most views in 24 hours

17:41 • 09/12

Frank Sinatra auction fetches $9.2m in New York  

17:30 • 09/12

'Just name any Armenian who isn’t concerned over Artsakh,' Ter-Petrosyan says after voting

16:42 • 09/12

California officially becomes the first state in the US to require ALL new homes to be powered by solar energy

15:15 • 09/12

Serj Tankian: Very proud of Armenian brothers and sister going to polls after fighting corrupt regime

14:56 • 09/12

Turkey’s intel chief informs US senators on Khashoggi murder

14:40 • 09/12

Kocharyan’s arrest ‘unrelated to snap election’, says acting premier

13:51 • 09/12

Thousands march against Serbian leader’s autocratic rule

13:39 • 09/12

Our efforts must focus on economic growth and democracy-building, says parliament speaker

13:06 • 09/12

Dog found waiting for owners where house once stood after California wildfires  

12:44 • 09/12

'This is a vote of future', President calls for responsible attitude to Dec. 9 snap election

12:16 • 09/12

Brazil spiritual healer accused of sex abuse

12:10 • 09/12

All eyes on French Presidnet Macron after fresh 'yellow vest' protests hit Paris again

12:00 • 09/12

Ex-Soviet dissident Lyudmila Alexeyeva dies at 91

11:18 • 09/12

Armenia holds snap parliamentary election

10:21 • 09/12

China threatens Canada with 'grave consequences'

18:07 • 07/12

Robert Kocharyan 'will be taken into custody', lawyer says after appellate hearing

16:50 • 07/12

Pashinyan, Aliyev ‘discussed Karabakh peace’ in St Petersburg

16:10 • 07/12

Australia passes ‘world’s first’ data encryption law

15:51 • 07/12

Oscars 2018: Kevin Hart steps down as host amid backlash from past homophobic tweets

15:09 • 07/12

Armenia ‘turned into big disaster zone’ after 1988 earthquake, Nikol Pashinyan says in Gyumri

14:13 • 07/12

Riots sweep Athens on anniversary of teen’s shooting death

13:27 • 07/12

EAEU member states ‘may transition to single currency’

13:03 • 07/12

Hraparak: Republican MP praises colleagues’ 'principled stance'

12:18 • 07/12

Stunning images taken by powerful new alien-hunting telescopes reveal the raw beauty of our skies

11:46 • 07/12

Armenia to declare December 7 ‘remembrance and disaster resistance day’

11:21 • 07/12

'Thank you for making 41's last ride so special': Emotional George W Bush thanks thousands who turned out to pay respects along the route of his father's funeral train

10:58 • 07/12

'Forgotten calamity': Armenia marks 30th anniversary of devastating earthquake

09:38 • 07/12

Turkey identifies Saudi courrier in Khashoggi murder

09:32 • 07/12

France protests: Eiffel tower to close amid riot fears

18:34 • 06/12

EAEU leaders agree on common oil and gas market, says Russia's Putin  

18:15 • 06/12

Ayb School establishes advisory board  

18:02 • 06/12

Pashinyan: Armenian government sets major task to double population in 20 years

16:58 • 06/12

Armenia interested in further Eurasian integration processes, Pashinyan says in St Petersburg

16:46 • 06/12

BBC Radio Shropshire's Vicki Archer's death was suicide

16:05 • 06/12

Missing Armenian contract serviceman found dead in snowslides  

15:41 • 06/12

Hrant Dink foundation to launch Armenian art workshop series

14:57 • 06/12

Eurasian economic summit may consider revised gas supply prices for Armenia

14:24 • 06/12

Pre-election debates 'must be made mandatory norm' under Electoral Code  

13:56 • 06/12

VW brand to accelerate margin hike for core brand

12:56 • 06/12

Luxembourg to become world's first country to make all public transport free

12:49 • 06/12

This New Year Ucom Offers Buying Smartphones at Special Price and Get 20 GB of Mobile Internet

12:35 • 06/12

Deadly car bomb attack hits Iran's Sourth-Eastern port

12:27 • 06/12

Contract servicemen ‘stuck in snowslide’ in Armenia’s south; one reported missing  

11:59 • 06/12

Armenia, Azerbaijan to hold next summit over Karabakh in January, says Azerbaijani FM

11:11 • 06/12

UN rights boss Bachelet seeks international inquiry into Khashoggi murder

10:49 • 06/12

Pashinyan to attend EEU summit in St Petersburg

10:29 • 06/12

New satellite images reveal activity at unidentified North Korean missile base

09:56 • 06/12

New Armenian-Azerbaijani ministerial summit ‘aimed to clarify positions on Karabakh’

09:30 • 06/12

Huawei executive arrested in Canada

18:02 • 05/12

World leaders to attend George HW Bush funeral

17:23 • 05/12

Armenian parliament speaker hosts delegation from Senate of Italy

16:55 • 05/12

Kanye West's 'stepfather' blames Kardashians for rapper’s erratic behavior

16:39 • 05/12

Australian Open: Andy Murray to use protected ranking to play in Melbourne

16:21 • 05/12

Brazilian woman gives birth, using womb transplanted from dead donor

15:53 • 05/12

Armenia needs mutual clarification of commitments with CSTO allies, Pashinyan tells Russian TV channel

15:05 • 05/12

Turkey seeks arrest of Saudi prince’s aides over Khashoggi murder

14:54 • 05/12

Armenia, Azerbaijan may coordinate statement on Karabakh' at Milan summit

14:38 • 05/12

Alibaba signs e-commerce trade hub agreement with Belgium

14:20 • 05/12

Russian Foreign Minister Lavrov to visit Azerbaijan

14:09 • 05/12

Oscars 2019: Comedian Kevin Hart to host 2019 ceremony

13:26 • 05/12

Kabul ready to talk with Taliban without preconditions – official

13:14 • 05/12

Duchess of Cambridge dons Diana's glittering headpiece once again as she joins William for the Queen's Diplomatic Reception at Buckingham Palace

12:44 • 05/12

Armenia has not made special requests for postponing CSTO summit, says acting premier  

11:57 • 05/12

Heart-stopping moment man falls into a pool of alligators after his rope swing snaps

11:33 • 05/12

US policies on Armenia ‘aimed at fostering independence’  

10:42 • 05/12

US says it will pull out of INF treaty if Russia does not comply within 60 days  

10:21 • 05/12

Zhamanak: Republican’s pre-election strategy 'built on plans to flee Armenia'

09:49 • 05/12

CSTO postpones summit due to snap elections in Armenia