Armenia’s Financial Sector Sees Significant Growth, Remittances Play Key Role

Yerevan, Armenia - Over the past decade, Armenia’s financial sector has experienced remarkable growth, driven in part by an increase in remittances from abroad.

Banking and Insurance Sectors Show Strong Growth

According to a recent report by the Asian Development Bank Institute (ADBI), the number of banking cards per 1,000 adults increased significantly from 91 in 2007 to 610 in 2016. Similarly, the number of insurance contracts signed during the year has been steadily rising, with around 300 contracts per 1,000 adults in 2016.

Remittances Play a Crucial Role

Remittances, which are an important source of income for Armenian households, have also seen a significant increase. In 2016, Armenia received $1.33 billion in remittances from abroad, accounting for around 13% of the country’s GDP. The report highlights the importance of formal and informal remittance transfer channels, with many individuals using specialized banks and money transfer operators to send and receive funds.

Low-Cost Remittance Options Available

The postal services operator HayPost has also launched a money transfer system, offering low-cost transactions with fees ranging from 2-4%.

Technology Drives Financial Sector Growth

Technology has played a key role in Armenia’s financial sector, with the usage of mobile and Internet banking transactions on the rise. The number of active mobile money accounts increased seven times from 2012 to 2016, while the value of mobile transactions grew exponentially over the same period.

SMEs Show Progress but Still Face Challenges

In terms of small and medium-sized enterprises (SMEs), which account for around 98% of all registered businesses in Armenia, the country’s OECD SME policy index score was 3.53 out of 5 in 2016. While there are still challenges to accessing finance, with around 32% of firms reporting that they were discouraged from taking loans, the report notes that the sector has made significant progress in recent years.

Conclusion

The full report can be accessed on the ADBI website.