Now Clients are Able to Choose the Terms That Suit Them Best!
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What a loan is each and every one of us knows quite well – the American debt dependence syndrome has affected us, too. Today there are many enough banking products to make one completely bamboozled, but in essence they all have the same terms and the same principle of service. Ameriabank was the first to chance breaking the old stereotypes with a new and partly innovational client-centered idea, where the client designs his own loan on the most preferable terms. A loan so designed will be easy, functional and convenient. Ameriabank believes this is quite an attractive idea and expects a great inflow of potential borrowers. The details of this innovation are disclosed in an interview to ArmInfo by three beautiful women of Ameriabank. This exclusive interview features a woman’s delicate opinion and approach to banking.

Today Ameriabank is very popular among potential borrowers, need we say, due to proclaimed commitment to innovation – a complex and controversial matter. This by no means prevents the bank and its specialists, women this time, from generating and promoting new ideas. So how exactly do they manage to implement their at first sight quite out-of-the-way projects?

Ms. Irina Abrahamyan, Head of Retail Crediting Division: We are aided in this, as you truthfully said, difficult task by our clients. It’s not for nothing they say that desire for the new is an indispensable part of human imagination. We used this idea by helping our clients realize their boldest imaginations.

In banking it is difficult to come up with a completely new product or service. Often it is just modernizing already existing products. What is it that makes Ameriabank’s products different?

Late past year Ameriabank held a large-scale creative competition under the slogan “I Am Free”. The contest was crowdsourcing-based, enabling Armenians from all over the world to express their ideas freely. We have tried to apply this concept of 100% freedom to all our products and services without exception. From now on each and every client using our retail services can enjoy the freedom of choosing the terms of his services himself.
There are many who don’t understand how exactly this works. So I’d like to use this opportunity and explain it to all our existing and potential clients. Dear clients – borrowers and depositors: you can get a traditional loan or make a traditional deposit, but you can define its terms yourselves. You are free to choose how to repay your loan: whether to use the annuity scheme, when you make equal monthly installments throughout the whole term, or differentiated payments, when the amount of repayment decreases monthly and interest accrues on the decreasing outstanding loan, or mixed, when you fix the date (month) of repayment yourself. This last option is especially convenient and even irreplaceable for seasonal business. You are also free to choose the currency (AMD, USD or EUR), pledge, insurance. Depending on the terms you choose, we can review the interest rate.

It is your policy and you particularly emphasize it now and again that each client of Ameriabank should first and foremost feel himself a partner. Are Armenian borrowers good enough partners? By enabling borrowers to define the terms of the loan, what does the bank gain, other than material benefits?

You are quite right: each and every client of ours, be it small, medium or large, is our partner. The awareness that he is a partner not just client should not leave him for a second. This is why we thoroughly revised our approaches to give the initiative to the client. We readily consider the client’s loan application without requesting any additional documents, wholly relying on the information the client provides. Not until making a preliminary decision do we request the client to provide further information. You might think this is some sort of trick, or at least an attempt to gain the client’s confidence, but we simply try to imagine ourselves in our clients’ shoes: how would you feel if you went out of your way to get all required documents in place and then got turned down by the bank? The same logic works in our client managers service: each client has his personal client manager who provides full informational support.
As for Armenian borrowers being good partners, I’d say this: it’s the same for users of bank products as for any other consumer: the more affordable the product, the more desired it is.

I am not an Ameriabank client, but I am still interested in some of its products. So why am I not your client? This does not seem to fit into the pattern you just described.

I have good news for you: very soon you’ll become our new, and I’m quite sure, one of our happiest partners. The offers I and my colleagues will present to you are quite interesting and singular, and I am sure you’ll find something that quite suits you. Note that lending is just part of our diverse package, and there are many other products that could interest you.

On one hand, innovations help survive in an environment of tough competition, increase client base, boost financials, on the other hand they clash with such concepts as safe (economically) functioning of the bank.

While developing a product we weigh all possible risks, calculate ratios, including the borrowing capacity of potential borrowers, we analyze the borrowers to make sure they will be able to repay the loans when due, and many other things. All these precautions together help us mitigate the credit risk. But of course we cannot protect ourselves against all risks.

Market is quick to copy innovations and so they become less unique. Isn’t this annoying?

You’ll be surprised, but no. They always copy – you cannot avoid this in a market environment. This is what makes us go on, explore more and every time come up with something really new.

Initially Ameriabank had declared itself as a corporate and somehow “wealthy” bank, but recently you have shifted towards universalization and are becoming a “bank for people”. What happened? Did you exhaust yourselves in corporate lending?

Not at all. It’s not like this, you see. International experience tells us the opposite: it’s universalizaiton that helps survive in crisis times. We cannot just ignore this. Yes, we did establish ourselves as a corporate bank and today we are leaders in this segment of the market. Now our goal is to become leaders in retail banking as well. For example, we have risen from 8th position to 5th and we are determined to go on.

Naturally you are challenging your competitors?

I’ll say this: we expect to become leaders in this segment, too.

Here we end the “core” of the interview which was dedicated to Ameriabank’s innovation policies and gave an overview of the bank’s new approach. The second part contains more details about new solutions offered by the bank, presented by Ms. Arpine Mayilyan, Head of Micro and Small Business Lending Unit, and Ms. Liana Aghayan, Head of Individual Loans Unit.

No Additional Commissions, No Fines and Even No Pledge

Small and medium enterprises in Armenia are perhaps the most vulnerable link in economy: they often say that SMEs just cannot afford a loan. What are the mechanisms that can reverse their idea of a credit? Please tell about your experience of working with this segment.

A. Mayilyan: Firstly, Ameriabank’s SME loans are divided into corporate and retail types according to our criteria: retail loans are loans to companies whose annual turnover does not exceed 500 million AMD and staff does not exceed 300. Companies which meet these criteria can get a loan of up to 100 million AMD. These companies are hardest put to it. The reasons, both subjective and objective, are many. The most common are (for small as well as medium businesses) problems with correct handling of documents, problems with pledge, commissions, repayment schedule, the long time it takes the bank to make a decision. Nevertheless, commercial banks are quite active in SME lending and constantly come up with new offers.

So how do we tackle these issues? We offer to our clients quick service, flexible conditions and long-term cooperation. Each our client can, depending on the seasonality of his cash flows, choose the repayment schedule most convenient for him, which means he can pay more when he has more revenues and less in low season. The client is thus free to structure his own repayment schedule. During the process of servicing of the loan we charge no additional commissions, neither do we charge penalties for repayment before due date. We do not place any extra financial burden on our clients.
Recently we came up with a competitive offer for micro businesses. Now they can get a loan of up to 5 million AMD without any pledge required, provided there are guarantees by two individuals and/or companies. You will agree that such offers are very rare. This product comes with low interest rates and commissions, in other words, we value not the availability of pledge, but stable, growing and healthy business.

Sticking to the idea of freedom, Ameriabank also offers purchase order (contract) finance products to help companies perform their orders for provision of goods or services. To perform these orders, companies need extra funds and it is important that they get them quickly, without pledge-related hassle. This product is mighty support for small and medium enterprises, enabling them to make sure their production is not interrupted because of lack of funds and perform the orders they receive on time.

We also have good news for importing companies. To them we offer a highly convenient, safe and efficient product – credit line on customs card. Note that this product is not that profitable for the bank, since it implies certain benefits for the client, such as grace period (last day of the month the credit was used + 5 days). If the client repays the debt during the grace period in full, he will not pay interest. This product is designed mostly for clients who have had accounts with Ameriabank for at least 3 months, with credit limit making up to 50% of turnover on that accounts plus 50% of turnover in other banks during the 3 months before that. Even if the potential borrower is not an Ameriabank client, he can still get this credit, if he presents sufficient pledge.

In the end I’d like to add that Ameriabank breaks the old stereotypes that SMEs cannot afford a loan. On the contrary, we strive to become a stable and reliable partner for every micro or small business, making sure that they grow. And the proof of this is the 52% growth of our retail business loan portfolio over the past year.

Even Lending Needs to be Free...

L. Aghayan: Initially a corporate bank, which worked with big clients and employed an individual approach to each of them, Ameriabank has gained rich experience in this segment. Now we are about to use it in our relationships with retail clients, the only differences being a simpler procedure and less sophisticated products.

Regarding consumer loans, I cannot but ask about mortgage. It is expensive in Armenia, we hear people complain about this every day, but still one wants to have one’s own place. What new solutions does the bank offer in mortgage lending?

Again, our loans are like Lego constructor: we offer the clients to choose the terms that suit them best. Depending on his financial position, the potential borrower himself defines the repayment schedule of the loan, choosing one of the available options: annuity, differentiated or mixed. He can choose not to pay penalties for repayment before due date. He can also choose the mode of his interest rate: fixed or floating. Today banks commonly charge a 20-30% advance payment. We, on the contrary, require only 5% of market value of the property. Our mortgage loans have maturity of up to 15 years (instead of former 10 years). We undertake to obtain insurance, and finally, we undertake to appraise the pledge initially which means that the borrower does not have to pay for appraisal and other services until final approval of the loan.

We offer loans also for renovation, construction, as well as for purchase (renovation, construction) of commercial premises.

Even today banks choose their borrowers carefully. What has the bank to offer to car lovers?

Again, it’s the freedom for the client to define the preferable terms of the loan. We have preferential cooperation arrangements with almost all car dealers, and recently we began to work actively on the second-hand car market. Our new simplified tariffs enable us to boost our volumes significantly.

What other interesting offers has the bank prepared for individuals?

We offer a new, very interesting loan facility – investment loan, with terms close to those of mortgage (up to 15 years maturity). This loan is designed for those who want to invest their free funds into a project or obtain share in business. Actually this is a way to encourage investments of the private sector.

Over the recent years banks have been promoting their card businesses. What do you offer to clients?

We offer two options of credit line: credit cards (for non-cash payments) and overdraft (for cash withdrawal). Starting from March 1 we also offer open-ended credit lines with grace period of up to 51 days.

Thank you for the interview! 

Updated 25.03.2014, 14:26
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