Armenia's banks have opportunity to expand their customer base in regions

Armenian banks have an opportunity to expand their customer base in the regions overwhelmingly due to potential customers in peasant farms, say the results of a public opinion poll conducted by the Economic Development and Research Center (EDRC) at the request of the USAID as part of The Finance for Economic Development (FED) project. Micro, small and medium enterprises (MSME) and peasant farms throughout Armenia were polled. 

According to report recently published as part of the FED, 61.5% of the polled peasant farms have no bank accounts, 38.5% have bank accounts, including 68.2% have one account, 22.7% have 2 accounts and only 9.1% have 3 and more bank accounts. 

Nearly all the polled MSME that are legal entities use financial services: 32.9% use 5 and more financial services, 28.8% - 2 services, 20.5% - 4 services, 11% -3 services and 6.8% use only one financial service. 

As for the polled private businesspersons, only 4.7% of them do not use financial services, while 28.7% use 2 financial services, 19.1% - 3 services, 17.1% - one service, 8% - 4 services, 5 and more services are not used by private entrepreneurs. 

82.2% of the MSME - legal entities use financial services to pay taxes, 60.3% make cash withdrawals, 58.9% buy goods and services, 50.7% pay for loans, 49.3% sell goods and services, 45.2% - pay for communal and telecommunications service, and 13.7% - make salary payments. 43.9% of the total private businesspersons have bank loans, 39.4% use banks service to pay taxes, 31.9% - to make cash-outs, 21.5% - to pay for communal and communication services, 19.1% - to buy goods and services, 8.4% to sell goods and services, while no private businesspersons use bank services to pay salaries.  66% of the total polled MSMEs (legal entities and privates) have never taken bank loans as felt no need in it. 
Meanwhile, 46% of the total MSMEs did not taken loans as they had no such opportunity or habit, another 10.3% of the polled MSMEs say their partners or employees are against loans, 9.5% complain of complicated nature of financial services, 8.9% say tariffs and interests on loans are high and impracticable, while 6.2% do not trust in banks. 
The survey revealed that the overwhelming majority of the polled peasant farms (73.3%) do not need bank loans, 40.3% more farms have had no opportunity or has no habit to take a loan. 6.8% of them do not trust in banks, 5% complain of high bank tariffs and commission fees, 2.3% say the financial services are complicate, while 0.3% do not take loans a their partners or employees are against.  The survey results revealed the weak points of banks when it comes to deposit base in the regions. Thus, 75.4% of the polled MSMEs say they have free funds or savings to deposit with banks, 21.5% complain of too low interests on deposits, 27.7% say they have had no opportunity or habit to deposit funds, while 58.1% do not need deposits, amid 26.9% do not trust in banks.

65.5% of the polled peasant farms have no deposits with banks for lack of free funds or savings, 26% say banks are not reliable, 14.8% do not need deposits, 3.8% have no opportunity or habit to deposit funds with banks, and only 1.3% say the interests on deposits are low. 

Meanwhile, 38% of peasant farms have debts, 26.5% have banks loans, 11.5% have loans at credit organizations, 6.75% take money from pawnshops, 4.5% borrowed funds from privates. 69.3% of the peasant farms having debts took loans in a bank, 30.1% in a credit company, 17.6% from a pawn, and 11.8% borrowed from a private.
Only 58.7% of MSMEs using bank services are satisfied with them, 6.3% are very much satisfied, 31.9% are not satisfied, with 2.5% of them are extremely discontented at their cooperation with banks.