Exclusive interview of Artur Hambardzumyan, Head of Innovation and Quality Department of "Ameriabank" CJSC (continued) to "ARKA" news agency
ARCA: What role does technological development play in Armenia's banking system?
A. Hambardzumyan: New technologies play a dual role in the banking system. On the one hand, they allow solving business efficiency problems by reducing cost and opening up new opportunities, on the other hand, they force banks to keep up with the times. As customer behavior and lifestyles change, banks simply have no choice but to change and change the ways and means of service. There is a certain segment of the market where customers cannot imagine their life without new technologies, but there is also a much larger segment to which these technologies are not available. That is why it would be wrong to claim that tomorrow we will completely switch to virtual service, which will become the only way to communicate with customers. It is necessary to take into account the so-called generational preferences and convenience, and for this, when switching to new technologies, banks should not forget about the large number of customers who are used to traditional methods of service and "live" contact. And as for the technologies themselves, since they open up great opportunities for banks, banks have to follow them to meet the needs of the new generation of customers who cannot imagine their life without modern technologies.
ARCA: At what level is the development of banking technologies in Armenia compared to other countries?
A. Hambardzumyan: If we compare the technologies of Armenian banks with developed and developing countries, particularly Russia, we will notice that our banks are in the role of "falling behind". Of course, there were cases when certain products entered Armenia earlier than Russia, for example, the ArCa online service, virtual card payments, but in general, technologically, we are lagging behind. Let's take, for example, mobile banking services, which Armenian banks have just started to introduce, while in many CIS countries they have been actively developing for several years. Today, very few Armenian banks have mobile banking applications, which proves that we are currently in the role of the rear guard, trying to catch up with the leaders, rather than keeping up with the times. On the other hand, the figures show that the potential users of online and mobile banking services in Armenia today are relatively few. Of course, banks may argue that the market is not yet ready for mass implementation of remote banking services, but on the other hand, there was no quality offer. If mobile banking had been introduced earlier, it is possible that today the number of users would be several times larger.
ARCA: What is the reason for the technological backwardness of Armenian banks?
A. Hambardzumyan: The problem is the existing infrastructure. In particular, the reason many of our banks are technologically underdeveloped is their dependence on certain banking solution providers. Thus, about half of Armenian banks use "Armenian programs" as their main operational system. Some banks, including large ones, use another local solution, Elsoft, and some use software developed by their own or their parent company. Our processing company is also to blame for technological underdevelopment. Although all the mentioned companies try to develop their solutions within the framework of their own agenda, in any case, certain conditions are created, due to which we are not able to respond to changes and introduce new technologies in time. Historically, a model has been formed where the freedom of activity in the IT sector depends on the pace of development of the suppliers available in the market. And the transition to large international suppliers requires large investments, for which banks do not have a large enough business. As a result, we find ourselves in a dead end: you will not buy the expensive one, because such costs are not justified, and the local one does not always meet the latest technological requirements. Thus, it is the technologies available in our banks that limit the entry of innovative products into the market. That is why the size of the business must be such that the bank can afford to innovate, and the market must be large enough to make these investments profitable. This is where we face the problem of expanding banks and searching for new markets. unless there are market opportunities, there will be no serious investment in innovation.
ARCA: Which technologies are in the greatest demand in the banking market of Armenia today? In that context, what new services can be introduced in the near future?
A. Hambardzumyan: As for the service method, there is a segment that wants to be served easily and quickly, to solve all banking problems on the spot, at any time of the day, regardless of whether they are in the office or at the resort. Technologies are now moving in just that direction. Self-service systems such as internet banking, mobile banking, contact centers, ATMs equipped with new technologies and payment terminals are widely spread in Armenia today. Unlike us, in other countries these technologies have been used for a long time and have a large number of users. This is new for the Armenian market for now, but I hope that in 2-3 years remote banking systems will become one of the main ways of customer service. Today, payment instruments, e-commerce and online payment systems are developing quite quickly, our banks actively offer these services. The main competition is in the field of online payments. Today, one of the rapidly developing directions is payment instruments. It is hoped that in the near future personal payments will also develop, that is, money transfers from one individual to another individual using a mobile phone number or other means of identification. But in that business, the bank has to decide its role when, on the one hand, it just issues cards, and on the other hand, it acts as an infrastructure that acts as a gateway to online and mobile payments in the market. That is why the payment business will be widespread, and this will be the main form of transformation that will take place in the RA banking system.
According to the results of the ARCA DigiTech 2015 business forum, Ameriabank was recognized as the innovative company of the year. What work has been done to achieve this, what advanced technologies have been implemented?
A. Hambardzumyan, Ameriabank has been emphasizing the innovations I mentioned for several years. Moreover, the technological development of the bank was limited by the aforementioned factors, which did not always allow to introduce innovations. With all that, we tried to do everything possible to make it convenient for our customers and give them new opportunities to perform banking operations.
Our main feature is a multifaceted approach, when the bank provides all possible forms of service for the client. We have introduced ATMs with the ability to deposit cash, created a contact center through which we not only solve customer problems, but also carry out banking transactions. A contact center is actually a virtual customer service tool over the phone that serves as a substitute for a bank branch. In March this year, we introduced mobile banking for IOS and Android, and recently also for Windows operating systems. it is fully integrated with Internet banking, which we introduced back in 2009. To say more, we have already managed to update our mobile application, add new functions and features. From the point of view of carrying out transactions, our mobile banking system is quite advanced, through it you can carry out any payment transaction and manage both card and current bank accounts. Instead of password generators, we have implemented a corresponding mobile application, Ameria Token. We have also implemented a card fraud monitoring service that allows you to automatically detect and block suspicious transactions around the clock. No matter where the client is in the world, no matter what problem he has, he can call us at any time of the day, and our specialists will answer all his questions. In addition, we are actively promoting virtual payment terminals so that e-commerce can develop in the country and businessmen have the opportunity to sell their services online. In other words, we are trying to improve the service of trading points. In our country, all this is just developing, and we try not only to provide all the mentioned services to our customers, but to do it first. That's why DigiTech recognized us as the Innovative Company of the Year.
ARCA: What does Ameriabank plan for the further innovative transformation of its activities?
A. Hambardzumyan: We will continue to develop remote banking services, especially considering that our branch network is not so big compared to other large banks. However, the fact remains that for Ameriabank alternative ways of service occupy a priority place. It's not just mobile banking, it's also a full range of self-service tools, including fully self-service branches. Another direction of development is increasing our role in the market of real and virtual payments, cards and payment infrastructure. Recently, a new service was introduced that allows instant transfers from the bank's website from any card of the Visa, Master and Arca payment systems to an account or card opened in Ameriabank. This is a worthy alternative to quick money transfers, where friends and relatives living abroad can send money transfers from anywhere in the world to Ameriabank customers without leaving home.
We will do everything possible to make all new services available to all our customers in Armenia through advanced technologies, and Ameriabank will become the main market participant that will provide the necessary infrastructure for this. Of course, our market is small, and some things will reach us very late, because Armenia is not so attractive in terms of potential for large global markets.
ARKA: In your opinion, what is the competitive advantage of a technologically well-equipped bank today?
A. Hambardzumyan: The most important competitive advantage will be the bank that will provide serious and advanced IT solutions. There is an opinion that banks are turning into IT companies. That's why today we are trying to find all the alternative solutions of our information and technological infrastructure that will provide flexibility, allow us to respond in time to customer demands and increase business scale. And so those banks that pay a lot of attention to investments in IT and innovation today will have an advantage in the long run.
It is very important that innovations in the banking system are not seen only in the context of customer service. When we say innovative transformation, we mean that it also refers to the technological development of the bank's internal systems, management methods and business processes, which in turn determine the degree of efficiency of the bank.
ARKA: Can legislative regulation promote the development of high-tech banks?
A. Hambardzumyan: The Regulatory Body should support that process. Since 2015 since January, the Central Bank of Armenia is gradually tightening the regulatory capital requirements (according to Basel III). From 2018, all intangible assets, including IT investments, will be deducted from regulatory capital. And if we take into account that the threshold of the minimum regulatory capital has been raised to 30 billion AMD, the opportunities of small banks to invest in infrastructure are even more limited. As much as this new requirement corresponds to the international experience of banking regulation, it will not contribute to the growth of investments in the field of technology in our market. I think the regulator can still find some methods and forms of incentives. The question is not only the local market, but the ability of banks to participate in the global competition unfolding for the sake of the customer, because banking has long been global in nature. And for that, you need to have appropriate technological solutions. Of course, regulation is not the most important aspect of technological development, but it can both restrain the growth of investment and facilitate its inflow.