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HNB shares insights from the ‘new normal’ in banking with leading Asian peers

Jonathan Alles, Chairman, Asian Bankers Association & Managing Director/ CEO –HNB

Top management of Sri Lanka’s premier private sector retail bank, HNB PLC, shared insights on banking in the ‘new-normal’ with Asian industry leaders representing some of the region’s most dynamic banking giants, at the recently concluded 37th General Meeting and Conference of the Asian Bankers Association (ABA).

The sessions were inaugurated by ABA Chairman and HNB MD/CEO, Jonathan Alles who also participated in multiple forums including the CEO roundtables on ‘Navigating the new world order’. HNB Executive Director and Chief Operating Officer, Dilshan Rodrigo also chaired the regulator roundtable sessions focused on current banking trends and their implications on regulatory policies.

Innovation: a silver lining in the pandemic

Addressing the CEO roundtable, Alles presented a compelling case study on how HNB used the crisis that resulted from the pandemic as an opportunity to fast-track digital innovation, and optimise support to customers, enterprises and SMEs impacted by the on-going crisis.

“The COVID pandemic has certainly left a dark cloud over Sri Lanka and the world, but there were some silver linings as well. Initial hesitancy by some clients to adopt digital solutions gave way to rapid and unprecedented adoption of digital banking services. Timely investments in expanding our technological capacity and capabilities ensured that we were ready to deal with the drastic surge in usage.

“Having established a robust and reliable experience for customers, we are also improving middle-office productivity. HNB is particularly focused on leveraging data analytics, artificial intelligence (AI) and robotic process automation (RPA) to further enhance customer service. We are also enhancing Business Intelligence tools to improve our predictive capabilities. Such insights will further increase resilience to continuing volatility, and strengthen our ability to support customers and revive economic activity,” Alles stated.

Empowering the rural sector

He further noted that the critical need of the hour for Sri Lanka was in extending this new paradigm in tech-empowered banking to the rural sector, for which HNB is actively pursuing partnerships to offer value-added services to this segment.

“Any tech or digital strategy which leaves out the Micro, Small and Medium Enterprises (MSMEs), would be futile, given that the sector accounts for approximately three quarters of the entire Sri Lankan market. Sri Lanka already has one of the highest levels of mobile and internet penetration in the region. As a result, most SMEs have already got the basic requirements – such as access to a smartphone and internet. That is all they need to start transacting digitally.”

“By offering the grassroots of our economy access to digital payments, cash management, distributor finance, supply chain financing models and standalone SME platforms, we see immense potential to rejuvenate the rural economy. The pandemic has also exposed Sri Lanka’s vital need to boost domestic production, and reduce dependence on global supply chains where possible. In response HNB is further expediting efforts to forge partnerships that will empower Sri Lankan agri-preneurs and techno-preneurs to step into these gaps, and create vibrant new businesses, in alignment with the Government’s vision for a grassroots-led economic revival,”Alles explained.

Conducive regulatory environment

Elaborating on the broader success which Sri Lanka has enjoyed in accelerating digitalisation across the banking sector, Alles commended the proactive stance of the Government and the Central Bank of Sri Lanka, in prioritizing a conducive environment for technological change while fully supporting operational continuity during the pandemic

“The Government and CBSL took proactive action from the start of the pandemic, and almost immediately, banking was declared an essential service, enabling us to function through lockdowns, under tight new social distancing, health, and security regulations.”

“On the technology front, CBSL’s visionary digital transformation strategy has provided a vital framework and direction for banks to follow. As a result, Sri Lanka has made excellent progress in its digitalization journey, and all stakeholders are fully committed. With proactive action on programmes like LANKA QR we are already seeing a grassroots impact, and the future for the Sri Lanka’s digital ecosystem is very promising,”

Providing support to businesses

Alles further noted that supporting the recovery of pandemic-affected businesses will continue to be a key responsibility for all banks moving forward.

“Today, banks across the globe are working as a de facto delivery system, delivering cash for those in need. However, with no clear end in sight and the virus still rampant, banks are acutely aware that how they respond to the crisis now will determine how they will rebuild for the future. Providing support to governments and customers is crucial during this crisis. This will require banks to deploy the tools that they have developed since the 2008 Global Financial Crisis, to lead a coherent and extensive response to unchartered territory. One thing is certain: a strong banking sector will be fundamental to a strong recovery.”

In a separate session, HNB Executive Director and COO, Dilshan Rodrigo also shared experiences on measures taken by HNB to provide substantial support to customers facing difficulties.

“Just after the start of the pandemic up to 40% of our client businesses were on debt moratorium, however, as conditions eased this has fallen to less than 15%. It is very encouraging that approximately 85% of our customers are now able to service their debt. This is due to their being able to adapt rapidly, supported by the bank and the regulator, as well as HNB’s proximity to customers, which enabled us to accurately identify customers who were most in need and genuinely required debt moratorium support.”

Greater workplace inclusivity

The technology improvement initiatives which have been implemented, together with the adoption of remote working arrangements as a result of the pandemic, is also contributing towards enhanced workplace inclusivity that benefits female employees, the HNB CEO pointed out.

“Even before COVID-19 HNB was actively seeking to ensure greater diversity in the workplace, and a more even gender balance in the workplace. In addition to recruitment initiatives, we also sought to provide as much maternity benefits for pregnant staff members, and those with young children to be able to work from home, as well as providing more options for part-time arrangements and fixed but flexible contracts that puts more choice in their hands.

“Now following the pandemic 60% to 70% of HNB employees are working from home or remote sites. Since the infrastructure was already in place it was just a matter of scaling it up, which of course included bringing in additional cyber and other controls. Based on the success we have achieved since then, I am confident that that we will be able to continue these arrangements, even after the pandemic ends,” an optimistic Alles noted, however pointing out that this requires a change in organizational culture.

Since 1981, the Asian Bankers Association (ABA) has been the premier platform for Asian banks. ABA is the ideal forum to network, conceive deals, share know-how, and advocate bankers' interest nationally and internationally. ABA groups over 70 of the largest leading commercial banks and financial institutions in the Asia Pacific with the objectives of exploring banking opportunities in the region and enhancing the role of bankers in the economic development of the Asia Pacific.

With 254 customer centres across the country, HNB is one of Sri Lanka’s largest, most technologically innovative banks, having won local and global recognition for its efforts to drive forward a new paradigm in digital banking. HNB has a national rating of AA- (lka) by Fitch Ratings (Lanka) Ltd. The bank was also ranked among the World Top 1,000 Banks list compiled by the prestigious UK-based Banker Magazine for five consecutive years. HNB was also declared Best Sub-Custodian Bank in Sri Lanka at the Global Finance Awards 2020.