In the previous five years, Ameriabank's main financial indicators showed a progressive growth rate, which averaged 20% per year. A few months ago, you mentioned that the bank's SME portfolio has tripled in five years. Was 2019 as successful for the bank?
2019 was a very successful year for Ameriabank. We have maintained leading positions and are the first among Armenian banks in terms of key financial indicators. Our successes were also appreciated by international organizations. 2019 Ameriabank won the Euromoney "Excellence Award" as the best bank in Armenia, was recognized as the Bank of Armenia 2019. "The best bank of the year" by the prestigious magazine The Banker, and Moody's rating agency raised Ameriabank's rating by two criteria.
In the field of retail business lending, we also recorded excellent results, recording a 51% increase in the SME lending portfolio at the end of the year. Naturally, we are not going to be satisfied with the results achieved. If you remember, in 2018 Ameriabank implemented a scoring system that works when issuing unsecured SME loans up to 10 million AMD. 2019 in the end we came up with a new proposal. now the scoring system is also used for the approval of larger business loans up to 20 million AMD, for which the credit specialist enters additional information into the system. This is a unique and very modern product not only in Armenia, but also in the region. The peculiarity of this product is that collateral security is required only for the amount exceeding 10 million AMD. This is a very important factor in ensuring access to credit for SMEs. We are in constant contact with small and medium-sized entrepreneurs, and we know very well how serious the issue of securing collateral is for them. That's why we tried to solve this problem. Another important feature of this product is that the system is automated and decisions are made very quickly. It gives entrepreneurs the opportunity to get a lot of money in a short period of time without large collateral. The numbers speak for the demand for this product. Within 3 months, the portfolio of SME scoring loans increased by 66%, and loans based on scoring made up about 60% of the total number of retail business loans.
What is happening to small and medium businesses today? What measures are you prepared to take to support PMB under the current conditions?
Now is a difficult time for SMEs. They must not only survive the crisis, but also learn to thrive in a world dominated by online services. I can say that we have always stood and will continue to stand by our clients, ready to provide the necessary support and overcome the consequences of the crisis together with them. Ameriabank was the first among the Armenian banks to announce a "credit holiday". We tried to organize the process using all our remote service channels to eliminate the need for customers to visit the bank.
I would like to note that now we are also very actively cooperating with the RA government within the framework of measures to neutralize the economic consequences of the coronavirus. Under this program, we provide targeted loans to small and medium-sized businesses to cover salaries, tax payments and other expenses. In the current situation, the fact that the process is almost completely carried out online is no less important.
How is the SME online lending platform developing? How in demand is it? Has the demand for online services changed due to the spread of the coronavirus?
That platform was also in demand before, and now, of course, the demand has increased significantly. The platform enables the client to submit an application online by attaching all the necessary documents, receive an online response to the application and receive the money in the account if the loan is approved. In the case of larger loans, our specialists contact the client by phone, and the rest of the process - submission of documents, receiving an answer - is carried out online. The online lending platform is a very important working tool for us and we will continue to develop it. In general, the demand for online services has increased. People are trying to avoid going to the bank unless absolutely necessary, and we agree with them. We have revised the rates of online services, and we have set a free month for a number of services. It is good that the bank was ready to work in this format and to solve all problems online.
2019 In May, you mentioned that you have been working with the Agile method with short sprints for about two years. Has this trend continued? What is your Agile philosophy and why do you think this way of working fits your business?
We continue to work with the Agile method, according to which employees from different departments focus on a single problem and deliver quality solutions during short sprints. Our innovation department coordinates the entire process in cooperation with business units. Thus, we get solutions in a short period of time that allow us to provide the best results. We developed a number of banking products in this format and will continue to work in the Agile format, given its high efficiency. We are one of the few Armenian banks that use this approach in their work.
In your opinion, will the competition among banks for the SME sector be preserved in the Armenian market?
Yes, I think that competition will be preserved, primarily due to the measures of the RA government aimed at supporting small and medium businesses. And here the banks that are ready to work in the new conditions will be in the most favorable position. For Ameriabank, moving a significant part of its operations to the online platform was not stressful, as it is not the first year that we have offered many online solutions and a full range of remote banking services to our customers. I would like to note that back in 2018, when we were just introducing the SME loan scoring system, there was no other bank in the market apart from us (perhaps there is none now) where the lending process was fully automated, allowing the client to submit an application online at any time of the day and receive loan within minutes. It is a great advantage for us, we use it, expand and develop it. We are currently working on developing a PMB ecosystem that will benefit many of our customers. We develop solutions and services that will allow you to fully solve all SME problems, from business establishment to lending.
What key trends in global banking would you identify for SMEs? What directions do you think will develop most dynamically in 2020?
2020 the whole world and all the banks are moving towards digitization very fast. This trend was noticeable in the past as well, but the epidemic stimulated the faster transition of all possible processes to the online platform. Our strategy envisages two important milestones: digitization and diversification, therefore, the basis of our activity is the automation of all key processes and the use of all available online channels. In this regard, we stand firmly on our feet and have all the necessary solutions. As I mentioned, in 2020-2021 we will work towards automating the PMB ecosystem as well as all internal processes.
The source: SME Banking Club