Thursday, January 9 2014 15:29

Bank should fight for every client

ArmInfo Interview of the head of the Retail Business Department of CJSC “INECOBANK”, Levon Rubinyan, with ArmInfo news agency

INECOBANK, one of the most active banks at the retail segment of the credit market, has increased the product line and its coverage much. It has been functioning at the banking market of Armenia since 1996. Since development of the card market in Armenia, the bank has drawn out and introduced interesting consumer card products which are in a great demand with clients.

For 9 month of 2013 INECOBANK increased retail crediting by more than 14%, and by 25% versus nine months of 2012. What segments provided such a growth? How much are you going to increase the retail crediting portfolio in 2014?

Traditionally, INECOBANK occupies the leading positions in the retail business offering clients full assortment of products. Growth in all types of crediting for individual persons was fixed in 2013. However, the main volume was chiefly ensured thanks to the credits given to the trade points through credit cards and lombard credits. In 2014 the bank is going to increase its retail portfolio by 25% - up to 38 billion AMD. By the way, by certain types of retail products INECOBANK covers up to 50% of the banking services market.

Which of the segments – credit cards or consumer credits have been developing more dynamically and why? Which of them does your bank prefer and why?

The card products have been covering the consumer crediting market of Armenia more and more. This is rather natural as overdraft and card credits give extra opportunities to loan debtors. Unlike traditional types of crediting, which are given non-recurrent and are repaid in a specific terms, credit card holders may chose how to use the terms and the size of the credit limit and how to repay the debt, as well as to cash funds or to implement non-cash operations. Credit card holders may also spend credit funds in abroad, buy something on-line, make use of discounts, etc. Stemming from the above mentioned, we put stress on the card products and we are going to develop products of this segment through introduction of the card products which are easier, available and meet demands of clients.

How do you assess the present state of the banking retail in Armenia? What pre-requisites do we have for the growth of the banking retail business?

I think that the sphere of the banking retail services in Armenia needs development. For development of the crediting specter of the retail services the banks still have much to do and reform. However, participants in the banking market have understood significance of this segment and are actively entering the banking retail system. At present, banks have been holding harsh competitive fight for attraction of clients. This makes them work hard for raising the quality of the offered services.

What challenges will the banking retail of Armenia come across in 2014?

As I have already mentioned, almost all the banks in Armenia make great efforts for development of the retail business. There are many problems in this sphere, which the banks may resolve through the local reforms. For instance, through raising of availability of the banking services, improvement of the quality of services, introduction of the products which meet demands of clients, through simplification of the procedure of rendering services, etc. However, we still have the system problems which hinder development of the retail banking in Armenia, one of which is absence of a fully-fledged database about individual persons, which would ease much the process of gathering information about outstanding debts .and would make it possible to manage risks more effectively. By the way, the problem of such risks is still relevant today, and it would be better for the banks to cooperate and settle this problem by joint efforts.

It is hard today to imagine dynamical growth of the banking retail without using of IT?. What remote services are the most relevant today? What technologies does your bank prefer?

Internet-banking, mobile-banking, SMS-banking as well as ATMs and payment terminals are widely used in all over the world.
At present, INECOBANK offers its clients Ineco Online service, which is beyond traditional imagination about Internet-banking in Armenia. We offer our clients the whole specter of the banking services with a convenient interface which gives an opportunity to implement any banking operation starting from getting a credit and ending with making an insurance policy. Over the coming years the bank is going to make big investments in development automated systems so that to raise convenience of the banking services, reduce operational risks, which in its turn, will reduce prime cost of the banking services much.

Are you planning to increase the number of your ATMs and POS-terminals in 2014? If yes, by how many?

Our ATM network is developing along with the needs of our customers. Our ATMs are located mostly in the places where our existing and potential customers spend their money. In 2014 we will follow the same logic. Our POS-terminal network is one of the biggest on the market. For our cardholders POS-terminals are one more chance not to use cash when buying something, while for many outlets this is a way to attract more customers.

What changes do you expect in the behavior of the new generation of bank customers? Do you expect them to use alternative services for making their payments?

Today’s customer needs not only loans but high quality payment services. This need will grow as more and more people are beginning to use non-cash mechanisms for receiving and spending their wages and other incomes. So, we need to offer them a simpler package of fund management services. We already have such a package. It offers both active account holders and potential customers opportunities to cash their money through our ATMs and branches, to replenish their accounts and to repay their loans by means of our terminals, to buy products and services non-cash using our cards, to make on-line payments, etc.. We have customers who use the whole package though they have never visited our bank.

The Bank has recently launched new card products: Aparik Plus, МasterCard Shopping. What is the advantage of these products? Are you going to extend this line?

Aparik Plus was introduced 6 years ago. This credit card is meant for shopping at over 1,000 trade outlets and service points, which are INECOBANK’s partners. This card is very convenient to the customers, who regularly make use of the loans provided at the trade outlets. Whenever these customers buy something on the installment plan, they don’t have to sign a new loan agreement.

MasterCard shopping is a product of a higher class with a higher lending limit for the line of credit. One can not only do shopping at the partners’ trade outlets, but also withdraw cash from the credit account if necessary.

It should be noted that both cards allow the cardholders to enjoy up to 50% discounts when doing shopping. In 2014 we are going to launch 2 or 3 new card products and provide our customers with additional opportunities and advantages.

INECOBANK is also actively increasing the mortgage portfolio. Does the Bank work under the Program “Affordable Housing for Young Families”? If yes, how much demanded are the mortgage loans under this Program?

Lending under the Program “Affordable Housing for Young Families” is in quite big demand, however, there is no large-scale lending because of the tough requirements to the borrowers. The requirements include the age of the borrowers, other available property, joint income amount, value of the property to be bought, advance payment (30% of housing value for the residents of Yerevan, and at least 10% for the borrowers from the provinces). There are also some restrictions regarding the location of the property to be bought. These tough requirements limit the opportunity to make use of the Program despite the attractive interest rate and the redemption period. Thus, under the given Program the loans are provided for up to 10 years at 10.5%, with 2% subsidized by the Government for the borrowers from Yerevan, and 4% for the borrowers from the provinces.

Is their any demand for car loans? How much will the portfolio of the Bank’s car loans grow upon completion of the year 2013 and how much will it rise in 2014?

Before 2008 INECOBANK was providing car loans quite actively both in the primary and secondary markets. After 2008 the customers’ creditworthiness slumped. As a result, not only our Bank, but also some other banks suspended automobile lending. Now we have resumed auto lending, but we are conducting a conservative policy given the high risks of this segment. The share of auto loans in the total loan book of the Bank is, therefore, not so high.

What is the Bank’s strategy in the retail segment of the market?

The Bank’s strategy in the retail segment is based on establishment of long-term and reliable relations with the customers. In particular, we ensure affordability, high-quality service, readiness to solve the problems promptly, and we are guided by the principles of a reasonable price policy. The Bank also uses the method of active sales. We do not wait for the customers to apply to us; we ourselves offer them our services ranging from remote services to direct contacts with the customers. The key retail problem in Armenia is that very often the customers have to visit the Bank and ask for specific services. In the corporate lending market that time passed long ago. Today the banks themselves offer their services to the business customers. The retail lending market is also gradually starting using this method, because the banks realize that they should fight for each customer.

By Gayane Isahakyan

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Bank should fight for every client