In his interview for Regional Post Magazine, the Chairman of the Union of Banks of Armenia (UBA) Daniel Azatyan discusses the system’s stability, digital advancement, and the growing role of Armenian banks in the international financial arena.
Interview : Arshak Tovmasyan
Photo : Union of Banks of Armenia (UBA)
Mr. Azatyan, the Union of Banks of Armenia has been representing the banking sector for around three decades now. How would you assess the transformation and the current health of Armenia’s banking system?
— The Union of Banks of Armenia (UBA) was founded in 1995, and this year it will celebrate 30 years of representing all commercial banks in Armenia while protecting the interests of its member banks.
The evolution of the banking system can be categorized into 3 stages: the 1990s marked the establishment of the system, the 2000s were the years of formation, and the 2010s were the years of development.
At present, our banking system is regarded as stable, developing, reliable, with a high level of liquidity. It is capable of adopting modern developments and changes, including digitalization, risk management, compliance, etc.
Social Event in the framework of the 30th anniversary of the Armenian Dram, September 2024
At present, our banking system is regarded as stable, developing, reliable, with a high level of liquidity. It is capable of adopting modern developments and changes, including digitalization, risk management, compliance, etc.
As the voice of Armenia’s banking community, what are the UBA’s primary responsibilities, and what key initiatives is the Union pursuing to strengthen the sector?
— For nearly 30 years, the UBA has focused on protecting the rights and interests of its member banks, identifying and resolving issues related to banking operations, promoting the adoption of modern infrastructures in the banking system, and supporting the implementation of regulatory standards, new methods, technologies, and management systems. In recent years, significant focus has been placed on the education and qualification of banking system specialists, along with efforts to enhance the financial literacy of the population.
How has UBA evolved over the past three decades? What is the expected next step in the evolution of the Union?
— In the coming years, the activities of the Union of Banks of Armenia (UBA) will aim to establish and strengthen international interbank connections and integrate with other banking systems. Considering that knowledge and skills in the modern banking system are constantly transforming, the Union will further intensify efforts to educate, train, and enhance the qualifications of the personnel in its member banks. In the future, we will continue to serve as a platform for establishing new and promising collaborations, exchanging professional proposals, and discussing innovative ideas.
Daniel Azatyan’s speech at the Banking Forum, October 2024
Armenian banks have shown remarkable resilience and adaptability in recent years. What do you consider the sector’s main achievements?
— The banking system has always demonstrated exceptional resilience in various challenging situations. In this regard, the recent years have been no exception, beginning with the pandemic, followed by the war, and other challenges arising from the geopolitical situation. Under such conditions, our banks not only managed to maintain uninterrupted financial operations and support government assistance programs but also became reliable and stable partners for international organizations. Operating in a competitive and healthy environment and in compliance with the regulatory and supervisory framework set by the Central Bank of Armenia, our banking system continues to remain stable, maintaining transparent and accountable operations.
As a result, the most significant achievement has been the development of public trust in the system. In accordance with a specific analysis, the level of trust in the system in Armenia is estimated at 3.8 points. For comparison, the global average rating is 4.0.
Financial inclusion has become one of the most pressing and transformative issues in global economic development, and its importance resonates deeply within Armenia’s evolving economic landscape.
From a regional perspective, how competitive is Armenia’s banking sector compared to other countries, and what unique advantages do our banks offer?
— Currently, there are 18 commercial banks operating in Armenia, with no state-owned banks and no banks holding a dominant monopolistic position. The top 5 largest banks according to their total assets occupy only 58% of the market, which indicates a healthy competitive environment and provides customers with a wide range of choices. Armenian banks also place great emphasis on ensuring transparency and customer security. Along with this, there are constant investments to increase the flexibility of banking transactions, improve services through digitalization mechanisms, and provide financial services that meet customer needs.
How would you assess the level of financial inclusion in Armenia, and what steps are banks and the Union taking to expand access to banking services?
— Financial inclusion has become one of the most pressing and transformative issues in global economic development, and its importance resonates deeply within Armenia’s evolving economic landscape. Armenia has made significant strides in expanding access to financial services, but gaps remain, especially in rural areas and among low-income populations. According to our analysis, nearly 93% of Armenians have interacted with the banking system in some capacity, whether through current accounts, savings accounts, or loans. However, 7% of the population still remains unbanked, with many residing in remote or economically disadvantaged regions. In recent years, banking access in Armenia has improved dramatically, with a growing number of individuals and businesses using financial services. Relocants from Russia who resettled in Armenia have also played a significant role in this. Despite the challenges, Armenia’s banking sector has made commendable efforts to address the barriers to financial inclusion. The banks and the Union of Banks of Armenia are actively working to expand access by implementing several initiatives. These include developing digital banking expansion, affordable and inclusive financial products, financial literacy, and education, including targeting vulnerable groups.
We’ve witnessed significant digital transformation in banking. How are Armenian banks adapting to these technological changes?
— New technologies such as digital banking, mobile banking applications, instant electronic transfers, and innovative payment solutions are actively being implemented. In this context, both the state and banks pay great attention to data digitization and cybersecurity requirements.
Armenian banks work with both local and international clients. What makes our banking sector particularly attractive to foreign customers?
— The stability of the system, technological progress, continuous growth in financial indicators, flexibility, personalized decision-making, and compliance with international standards provide a reliable financial environment for foreign customers. The stable economic growth and creditworthiness of our country also contribute positively to this development.
Meeting on “Banking System of RA”, January 2024
The banking sector in Armenia seems to be gearing up for more activity on environmental, social, and governance (ESG) topics in the coming months and years. Does UBA serve as a platform for discussing ESG issues? How can UBA help encourage or support banks in their relevant initiatives?
— ESG principles have gained widespread global recognition, and it was inevitable that our banking system would engage on this topic as well. The implementation of these criteria is crucial for modern banking activities, both for international organizations and regulatory bodies in several countries. Last year, the first International Banking Forum 2024 was organized by the Union, with a particular emphasis on the implementation of ESG criteria and modern approaches to them. The UBA Training and Qualification Center, with the involvement of international experts, organizes educational courses, among which the ESG agenda is given particular importance. There is still a lot to be done in this direction. We must continuously follow developments, find innovative solutions that will ensure the implementation of modern international requirements in banks, and contribute to the stable development of the system.
Looking at current trends and prospects, what developments do you anticipate in Armenia’s banking sector, and what changes would you like to see in the coming years?
— Emphasizing current trends, I believe that in the coming years, our banks will expand into the international market and engage in IPOs (Initial Public Offerings). Overall, an IPO can offer new opportunities both financially and in terms of management and competitive positioning in the market. Achieving success in this endeavor will require thorough preparation, along with adherence to market regulations and international standards.
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