Exclusive interview of Karen Yeghiazaryan, newly appointed CEO, Chairman of Evocabank’s Management Board to Banks.am

Mr. Yeghiazaryan, you have been trusted the steering wheel of Evocabank. To what extent was the offer expected for you and are you ready for this responsible and extremely challenging role?

I have been working in the banking sector for 20 years, including 16 years in this bank, of which over the last 11 as the deputy chairman of the bank’s Management Board.

I had assumed the role of making strategic decisions concerning the bank’s development and responsibility for such decisions much earlier. 18 months ago the bank made a shift in its strategy and business model and announced: ‘From now - Mobile First’. This meant expansion of digital banking, an area for which I was directly in charge of.

I was also entrusted with the task of rebranding and digital projects of the bank. Thanks to the effective work of our team, today we have impressive achievements in these areas: the new brand is recognizable and our strategy is clear. Subsequently, our customer base grew sharply and the level of satisfaction with our services improved significantly.

The management of the bank was entrusted to me at a very important point. Now, we are at the very center of our digital transformation process. It requires new change management skills. Traditional banking is migrating to digital environment which makes the path even more difficult and accelerates the pace together with increased responsibility. It is an important, inevitable and very interesting challenge for me.

In his announcement about rebranding Evocabank’s owner Vazgen Gevorkyan mentioned that the enhancement process would be ongoing. Where is the bank standing in the change process now and what will be the first steps to be taken as executive?

Based on banking services market survey which was conducted by a leading local consulting company, the bank is among market leaders in terms of Top of Mind Awareness. Also, Evocabank is among the top 3 or 5 by many other marketing indicators. The bank is in the top 3 in terms of online and mobile banking.

We were the first to introduce totally online lending. We developed state-of-art mobile technologies, enhanced the SingleTOUCH mobile loans. More than 44 000 online loans AMD 28 billion were provided thus making this product the bestseller in the market. Besides, Shopping Card online loan was introduced for shopping. Today our mobile application has an integrated terminal which allows making over 200 payments through EvocaTOUCH application. This service is accessible not only for our cardholders but also holders of cards issued by other banks.

EvocaTOUCH application is already downloaded by 220 000 users. Thanks to these activities the reputable Global Finance magazine has ranked Evocabank as the Best Consumer Digital Bank of Armenia for the second year running.

Our Band is fairly progressive and trendy. Lately, in collaboration with a renowned stylist we have liberalized the Bank’s dress code.

The bank’s successes in social media are inspiring. Among 17 Armenian banks, we are the absolute leader on Instagram with our 17 000 followers, and the 2nd on Facebook with our 70 000 followers.

While we have been demonstrating sustainable growth and adequate profit indicator throughout the history of our operations, today it is insufficient. Market itself and life pace have changed, hence expectations, efficiency and success criteria have also evolved. Being proactive, projecting future trends and changes, we have selected the path of digital banking.

We do not strive to simply digitalize our existing business processes. Rather, we change the banking philosophy radically and fundamentally. Our ultimate end goal is to facilitate the daily life of our customers, make interaction with the bank pleasant and our banking services faster. We consider that we do not have depositors, borrowers, cardholders and customers: we have partners.

Over the last few months the bank underwent some major changes, starting from technical enhancement, service remodeling to its brand awareness growth. We still have many things to do, many new ideas and projects. Some of them will be posted in the nearest future.

In preparing our future development plans, we have been guided by the bank’s vision ‘to be the most innovative and progressive financial institution delivering banking services in Armenia with online access to its services’ and have aimed to contribute to realizing our mission, ‘deliver simple, fast and convenient financial services heavily relying on state-of-art technologies.’

On June 1, a new organizational structure was introduced in the bank. Major changes also took place in our top management composition. Among 4 deputies of the Management Board, 3 deputies will be responsible for digital, retail and corporate business areas accordingly. Another deputy who will join our team by the end of this month will coordinate the financial block. Several units and branches already have or will soon have their new heads.

In July we will revise the bank’s Long Term Development plan.

Creditability rating for large corporate borrowers will be performed in a centralized manner by the newly created Financial Analyses Division.

The newly established Ethics Committee will review potential violations of the code of ethics and possible related party relations and conflicts of interests. Work of the being created procurement committee will allow to ensure maximum transparency of procurements, tenders and other bidding processes.  

In addition, a modern e-documentation flow and problem management systems are being installed in the bank.

There is much to do. The bank has ambitious targets based on which we should strengthen our leading positions and increase the level of our profitability and efficiency ratios.

Does the bank have an adequate staff for implementing its new strategy? Are you planning to take additional motivating steps in this regard to attract highly qualified specialists to the bank?

The Mobile First strategy requires a team with new skills -active, fast, open-minded, progressive and independent. To achieve a result, the employee himself should believe in the brand and its direction, be the bearer, ambassador, consumer and champion of the brand. Now a fairly big number of younger employees work in the bank who strive to be more competitive, like to perform hard work independently but be appreciated. They prefer online shopping and online entertainment. They have a better understanding of our target group as they represent the latter. Today we take active steps to recruit competitive staff with such culture.

We pay special attention to our service quality. Last year we invited a hospitality specialist with international qualification who trained our team for several months. Yes, not a financial or banking, but a hospitality specialist. Uniform standards for hospitality and customer service were implemented in the bank. As a result, the service quality has improved significantly and the number of complaints and negative feedback has dropped.

Our team is compact: 250-260 employees. This allows maintaining contact with and be informed about achievements and progress of each member of our team. The bank will welcome and financially support and encourage our employees’ aspiration to professional education growth. The bank will reimburse international qualification examinations fees along with adding supplementary payment to an employee’s salary for his or her each received new qualification.

From now on, recruitment of new members of our team will rely exclusively on the applicant’s education and professional skills. There will be equal universal bases for career promotion, performance appraisal and reward for all staff members.

I am sure that establishment of this culture will significantly contribute to increased efficiency of employee performance and higher motivation which, in turn, will lead to a self-evolving, innovative environment based on team work.

Who are the target of your bank: individuals or corporate customers? Evocabank constantly stresses the need for innovations, new technologies, new financial digital services. On the other hand, it is known that customers tend to be more conservative. Aren’t your concerned that your customers may accept new changes with reservations?

We deliver services for everybody, both tech savvy progressives, conservative customers, and small, medium and large businesses. Each of these groups requires specific approach. If the first ones enthusiastically accept our offered new solutions, others still need time for adopting new technologies. Therefore, we enhance the traditional banking services in tandem with the online ones.

I think that here the key challenge is to educate the public and increase technological and financial literacy. Today we are taking steps to demonstrate that digital banking is the best solution. It excludes queues, saves travel costs and time: transactions are executed with numerous privileges, at discounts and even free of charge. It is obvious that online banking is really beneficial, convenient and fast. Of course, listening to and understanding market needs is very important but there are cases when you should create a need and dictate the evolution path yourself. Sometimes you should introduce new technologies, absolutely new approaches to solve an issue and demonstrate their advantages. As Ford has said, “If I had asked people what they wanted, they would have said faster horses. No one would imagine that he needed a car.”

Evocabank has no distinguished active interaction with international investors. Should any changes be expected in this regard?

Yes, changes will take place soon. The bank’s former strategy did not envision any active interaction with international institutions. Today we are negotiating with several international financial organizations.

Cooperation with international investors, apart from its financial component, has huge consultative potential. It gives an opportunity for sharing valuable experience, strengthening the corporate governance culture, introducing new working and communications criteria. In this respect we are open to discuss any type of cooperation with investors.

In the context of global developments today they often say that banks will lose their classic appearance as such and transform into ecosystems with alternative services and diversity of opportunities. Do you stand ready for such a challenge?

On the background of global developments all institutions and systems lose their appearance and existing format. Supermarkets, taxi services, entertainment sector, shopping, education, etc. no longer work in the way they did before. Internet has changed the logic of operations across sectors. They have become more multi-functional, multi-layered and individualized.

Consumers prefer the opportunity for choice and freedom, although purchases are made easier and faster when one has a limited choice.  

Companies no longer offer a single specialized service, the scope is broadening, service clusters are being created which meet all consumers’ needs and go even further to offer services for their predicted potential needs.  

The banking sector is no exception. Bank branches will change their format and become showrooms for financial services and onboarding points which will help ensure customers migration from offline environment to the online one rather than provide face-to-face services. Financial agglomerations will be established in the form of fincourts, similar to food courts.

In visible future mobile platform has a competitive advantage and therefor the focus should be on developing this particular platform. Retail lending will virtually become an online function. Corporate lending will continue working under the ordinary scheme for some time but transition to the mobile format is just a matter of time.

Difference between interest rates for attracted and placed funds, i.e., income generated from traditional banking, will gradually cover banks’ expenses to a lesser extent. Delivery of related services will become a determining factor for generating a bank’s profit.

Changes involve not only the bank but also its focus on what is important. In the past for an individual to receive service in our VIP Zone, he should have a certain level of savings or turnover. Now we have decided to grant a VIP status also to any person with over 20 000 supporters in social media. It is a vivid example of transformation of our mindset and value system.

As you can see, there are many challenges, and expectations are high. My principle is: exert at least slightly more efforts than required in any undertaking daily, ensure better than was planned result and outweigh the expectations. Don’t you know that 0.99 ³⁶⁵ = 0.03 while 1.01 ³⁶⁵ = 37.8.

Khoren Ormanyan talked to Karen Yeghiazaryan