Banks in Armenia

10 Important things you should know about banks in Armenia

10 things you should know about banks in Armenia

Posted by: Tower International Consultants
Category: Business
Armenian 1000 AMD banknotes and visa cards on the table.

Do you have an interest in learning the key aspects of banks in Armenia? We have the latest details you need to be aware of regarding Armenian banks, relevant as of July 2023.

In Armenia, there are 18 banks, both local and international. They offer a variety of services and support major foreign currencies. All the banks are licensed by the Central Bank of Armenia, and their activities are regulated by law. 

The banking sector in the country is stable and well-positioned. According to Fitch Ratings, the outlook is positive, and in fact, Armenia has outperformed most countries in the region.  

Here are 10 factors shaping the banking sector in Armenia. 

Digitization of banking services is growing rapidly

The volume of online and card payments is increasing worldwide, driven by identity verification, digital signature, AI, and digitized governmental resources. 

Digital transformation of financial services is a priority for Armenia. Banks have been actively adopting and exploring technologies to enhance customer experience. Now they offer simple access to digital banking services such as opening a savings account, making a quick transaction, and getting loans without the need to go to a physical bank.

According to fintech expert Chris Skinner, “Armenia can position itself as a regional center of digitization and a major hub for financial technologies.” The country also is looking into crypto, metaverse, and NFTs to discover how to benefit from the technologies. 

Banking Sector is booming due to mass migration from Russia

Armenian banks achieved record-high profitability in 2022 due to the large inflows of non-residents and foreign exchange. From March 2022 to February 2023, 2,600 non-resident companies and 6000 non-resident individual entrepreneurs (mainly from Russia) were registered in Armenia.

According to Fitch, the gross revenues of the banks almost doubled, and the sector’s return on equity increased to 28% from an average of 8% over the past decade. The main source of profitability has been transactional income, such as fees and other gains on currency conversion. The Armenian dram appreciated 20% against the US dollar in 2022 and 2% in the first quarter of 2023. 

The banking sector’s performance is expected to remain stronger than the historical averages in the near term as clients will probably continue to keep their funds in Armenian banks. 

Opening a bank account is made easy 

Opening an account in Armenian banks is simple, requires no fees or minimal fees, and you can mostly do it remotely. The process is slightly different for residents and foreigners. Generally, residents of Armenia need to submit only a passport and social services card or ID. Foreigners may need to provide additional documents as proof of residence. 

For corporate accounts, both local and foreign businesses are required to provide similar documents, including a certificate of incorporation, a list of shareholders, a KYC application form, etc.

Opening a bank account in Armenia.
Opening a bank account in Armenia. In general, people living in Armenia are usually required to provide just their passport and social services card or ID. However, foreigners might need to present extra documents to confirm their residency. Photo by PixMeta Studio

Mortgages in Armenia are growing double digits 

According to the International Monetary Fund, over the past four years, the mortgage portfolio of Armenian banks has more than doubled, and the construction sector has increased significantly. The reasons for the growth are the variety of lending offers, simplification of the formation process, and programs such as “Accessible Houses for Young Families.”

Construction of the residential building in Yerevan
According to the International Monetary Fund, the amount of money Armenian banks have loaned for mortgages has increased by more than two times in the last four years. Image by PixMeta Studio

Another popular option has been repaying income tax refunds on mortgage interest when buying an apartment in a newly built building and directly from the owner. However, the program is gradually phasing out in Yerevan to encourage construction in other regions and mitigate the financial risks of increasing mortgages. 

Customer service is good

Generally, Armenian banks provide support in three languages; Armenian, Russian, and English. The staff members are skilled, helpful, and friendly. You can find answers to your questions by contacting an operator through a call, email, or visiting the bank in person. In case of suspicious activities, banks immediately contact customers to prevent any risks. 

The Central Bank Has Developed a Credible Monetary Policy

The Central Bank of Armenia holds a proactive monetary policy to maintain financial stability and control the banking sector. The institution has been successful in containing inflationary pressures by using different frameworks, structural reforms, and analytical tools such as stress tests. According to a recent report, inflation in Armenia is below target mainly due to easing food and transportation prices. However, pressures remain, and the Central Bank needs to continue structural reforms to unlock the country’s long-term growth potential.

The safety of your deposits is guaranteed 

The volume of deposits in Armenian banks has reached new highs. Media reports that deposits in Armenian commercial banks grew 31,21% in April 2023 compared to the same month of 2022. 

The safety of funds is protected by the Deposit Guarantee Fund of Armenia, a non-profit legal entity. ADGF automatically guarantees both Dram and FX deposits in banks operating in Armenia. The maximum amount of guarantee for dram is 16 mln, and for foreign currency deposits – AMD 7 mln. 

Mobile Banking is getting better

Armenian banks regularly launch new features or replace old apps with new ones to offer a better user experience. The main improvements are with the interface and ways of verification. There are still some bugs and technical issues with newly launched apps, but they are getting better with updates. 

More payment methods are becoming available 

The number of mobile wallets and payment apps has been growing worldwide. Armenian banks keep up with the trends and provide customers with simple and secure payment options. Currently, a major trend in the industry is contactless payments. In Armenia, customers can access global contactless payment methods, such as Apple Pay, Google Pay, and Samsung Pay, alongside local apps. Each method provides different features and cashback rewards. 

You can apply a complaint against a financial organization for free   

In Armenia, you can apply complaints against banks and other financial institutions for free and get professional help through the Financial System Mediator. It’s an independent, non-commercial organization offering an alternative dispute resolution  form. Every individual and micro-business entity has the right to apply to the Moderator, presenting a property claim not exceeding 10 million Armenian drams or its equivalent in foreign currency.

Wrapping Up 

Being a customer of Armenian banks myself, I can say that there have been significant changes and automation in the services. Overall, it’s become comfortable to pay bills, make transactions, buy things online, get loans, etc. And if you need to go to a bank, now you can save time and avoid queues using an app called Early One. Based on my experience, I think Armenian banks are doing good.

Dealing with banks is a part of our lives, and I wish you a great experience managing your finances. 

Discover the all-inclusive range of services offered by Tower International Consultants, designed to empower organizations at every step in Armenia. From expert consultation on state registration of legal entities in Armenia and seamless bank account opening to comprehensive accounting and legal advisory and services in Armenia, we have you covered.

Featured image: Armenian banknotes by PixMeta Studio, 2022