Interview of Aren Naltakyan, the CEO of Inecobank.

Mr. Naltakyan, let’s start with the results of the previous year. Are you satisfied with the outcome of 2019?

Of course, our team has been able to deliver pretty good results in several strategic areas. Most importantly, from the business point of view, we are once again one of the market leaders by the return on equity and net profit. These are, probably, the most important indicators for investors.

On the other hand, we have exciting developments in the spheres of both retail and corporate business banking. It’s noteworthy that in  retail banking, particularly in mortgage loan portfolio we have had a record growth of almost 90%, as a result of which the bank is currently ranked the 4th and, we have targeted to become the leader in that market   in the near future. At the same time, we are ranked the 3rd in the market by demand deposits from individuals. The combination of these two indicators provides clear information on the direction the Bank is moving in: we are gradually expanding our services package for each customer trying to personalize the solutions offered to each segment as much as possible. The other important direction is, of course, digital banking. We have been pioneers in this field in our region and in parallel to developing international scale solutions, we also have been able to lead and educate our society in this regard. In 2019 this process ultimately led to the record growth of almost 47% in the number of customers using online banking. Today we can state that most of our customers use our services 24/7 either by their smartphones or computers without even visiting the bank.

We have a similar situation in corporate business banking. Our special business branches, business-friendly online banking and tailor-made solutions allowed us to consolidate our position in the corporate lending market. It is worth mentioning that the majority of our business clients are SMEs, which are the driving force for the development of the economy. This is another matter of pride for us.
 
After this statement, a question arises about what to expect from Inecobank in the foreseeable future.

We already have some exciting projects planned for the near future, some of which have already been launched. As you know, 2020 is a year full of major sporting events, and having the youngest segment of customers our bank could not be left behind. We have already announced our sponsorship for Euro2020 broadcasting and the special offer of non-cash payments within the scope of the championship. By the way, when saying non-cash payments we mean both card and InecoPay transactions.

We also have more long-term projects, which are related to our operational infrastructure. We have invested heavily both in the areas of hi-tech and in the service, which will enable us to further our business growth. After the implementation of those infrastructure projects, even better news will not let them be waited for long. In a nutshell, they will include personal finance management tools, launch of new online products, development of contactless payments, enhancement of the customer experience and personalization in both digital platforms and new branches designed as per the new brand book.
 
I suppose it’s not easy to pass that road. What are the most serious challenges that the Armenian banking system is facing right now and how are you going to overcome them?

One of the biggest challenges in our business is the size of our market, which often does not allow the bank to get the desired scale effect on its investments. I think the existence of 17 banks is huge for our small and well-stocked market, and as a logical development of this situation, we should expect some consolidation processes in the banking system.

The next challenge is the development of Armenia's investment environment. In this regard the institutional reforms of the judiciary and the transparent legislative framework are particularly important.

The investment environment can only develop in countries where there is an effective judicial system. I am glad that some steps have already been taken in this regard. In terms of the development of the investment environment, I also consider the stability of the legislative field to be important. Recently, for example, various legislative initiatives, aimed at improving the financial-banking system, have increased. The continuous development of the legislative framework is certainly welcome, but I think the changes should be much deeper and should be based on meaningful discussions with the best professionals of the business and the sector, otherwise, they cannot have a positive impact.

The development of non-cash payments is also important. There is some activity in this regard, of course, but I think our steps must be much bolder. Legislative initiatives that promote non-cash incentives will increase the business transparency in Armenia, which will, on its turn, increase the investor confidence. Overcoming these challenges is certainly not easy, and requires the involvement of all stakeholders. We are open to such cooperation, and I am confident that based on public-private cooperation we will be able to produce truly tangible results in the foreseeable future.

Inecobank CJSC is one of the leading banks in the South Caucasus region, focused on individual customers, small and middle market businesses and large corporations offering a full range of banking services including break through and innovative digital banking solutions. For over 24 years the bank has been providing unmatched convenience in Armenia serving more than 500 000 customers and over 200 000 online users.

Inecobank developed and delivered industry-leading digital banking solutions with the purpose of introducing an entirely new culture of banking services.

- In 2009 the bank digitalized and fully automated the “Point of Sale Loan” product, reducing the loan generation time from 3-4 days to a few minutes.

- In 2012, with the introduction of InecoOnline, the Bank was one of the first to provide 24/7 banking services to its customers.

- In 2014 the bank launched InecoMobile, its Mobile banking application, which is the most popular banking application in Armenia with over 100 000 users.

- In 2017, the bank was the first to introduce a fully automated consumer lending solution through its mobile and online applications, which generates consumer loans 24 hours a day, 7 days a week.

- In 2018, the bank was the first banking institution in Armenia to introduce InecoPay, the cashless payments new system.

- The first full-range digital bank in Armenia, which enables individual customers a 24/7 access to full digital solutions: payments, lending, savings and other related services.