Banks.am has interviewed Aren Naltakyan, Development and Marketing Director and Management Board Member of Inecobank.

- Mr. Naltakyan, Inecobank is the leader by net profit and profitability as of the end of the first half of 2017. What's the bank's success formula?

- Our success has been largely driven by two factors: a large-scale transformation program and investment in IT solutions.

We have successfully completed a large-scale transformation program launched back in 2016, aiming to ensure best possible results and efficient management of the bank’s potential achieved as a result of the bank's organic growth over the years.

We have made some key changes to both business processes and organizational structure of the bank.

- What was the reason behind starting a transformation program?

- As Lewis Carroll once said, we must run as fast as we can, just to stay in place. And if you wish to go anywhere you must run twice as fast as that.

You have witnessed the fall of such powerful organizations as Kodak, Nokia, Hummer, and Blackberry. The main reason for all of those declines was the same, not being ready for timely adaptation to the requirements of the dynamic market. People's preferences and consumer behavior have begun to change very quickly and we have to start working today in order to achieve desired results in a few years from now.

At the same time, it is very difficult to modify a system a part of which you have been for more than 10-15 years. We received valuable help from a UK based team of advisers who have had senior positions in the largest international banks and consulting firms for many years and have extensive experience in consulting for financial sector in the post-Soviet countries. It was very useful to listen to the experts' opinion. As a result, I find it difficult to mention any field or process in the bank that has not improved to a certain extent.

As you can see, the results of this joint effort did not take long to.

- What were the main changes within the framework of the transformation program?

- We have optimized the organizational structure of the bank, which was imperative to reach the results outlined in our quite ambitious strategy.

In the branch network we have separated and fully segmented branches for corporate and retail clients. By the end of 2017 we will have four newly opened convenient branches, three for retail and one for corporate clients.

At the same time, a significant part of business processes has been centralized in the head office, which increased the quality of customer service in branches.

We have also considerably improved the credit risk management system, by improving our automated credit scoring systems and the overall lending process.

- Could you please specify what automated credit scoring system is and what kind of advantages it gives?

- First of all, it ensures the speed of decision-making, as well as an opportunity to make better credit decisions.

A large part of the decision-making on lending to individuals is made by our in-house automated scoring system, making it possible to immediately evaluate client's individual risk and to make the lending decision at the same time. We improve the system every year based on the analysis of the large database of previous years.

Our partners from Great Britain, who had developed scoring systems in various international banks, participated in the most recent upgrade of our scoring system for 2017. After these changes, the system can automatically determine the client's risk level and give an individual pricing offer, based on the level of the client's risk.

Today our risk management system is one of the most advanced and its best proof is the level of the bank’s non-performing loans (NPL), which is about 20% lower than the average in the banking system of Armenia.

- As a pledge of success you mentioned also the investments in IT solutions. How effective are the investments in this area?

- The technologies we possess today ensure flexibility and freedom to provide convenient customer service. We achieved these results through long and consistent work where the bank has always paid great attention to the role of technology.

Since the day of the establishment of the bank, we have always had a very strong IT team, which has always been involved in the bank's perspective development programs and has embraced the development vision of the bank. I can confidently say that Inecobank's in-house IT team gives the bank a strategic competitive advantage. To support this idea, I can bring forward the following examples:

- In 2009 we were the first bank in Armenia to establish the system of point of sales lending, reducing the time of the process from 3-4 days to a few minutes.

- Thanks to “Point of Sales” loans the bank financed more than 500,000 purchases in Armenia.

- In 2012 we were one of the first banks to launch Online Banking and Mobile Banking services with the help of which today our clients have an opportunity to make their transactions 24/7.

- One of the main advantages of our Online and Mobile Banking is that transactions take place in real time mode. For instance, if your loan repayment day is due on  a weekend you can make the payment through Online/ Mobile System on Saturday evening with no delays as the deal will be completed immediately.

- By the way, in 2017 there were 3 times more transactions through Online/Mobile Banking compared to the previous year, and the number of InecoMobile users today exceeds 50,000.

- What are the future plans of Inecobank? What is the strategy of the bank, as well as the next step on the path of digitalization?

- Our focus will continue to be on SME and retail segments. We are going to focus more on our digital solutions. From this perspective, we have already completed several projects, which will allow our clients to use all our services online, without visiting a branch, starting from account opening to loan disbursement.

As for digitalization, we have already started new projects, which will be based on the implementation of Big Data and AI solutions (Artificial Intelligence). This will allow us to create personalized offers for our clients at their preferred time, location and delivery channel in the future.
 
Siranush Simonyan talked to Aren Naltakyan