NDB Bank: Pioneers in providing innovative financial solutions for Sri Lanka’s national development
World Economic Magazine Inc. USA
NDB Bank is a Sri Lankan financial institution headquartered in Colombo. By creating superior shareholder value, the bank aims to be the driving force for a financially empowered Sri Lanka and the catalyst in the financial services industry.
In a recent interview with World Economic Magazine, Dimantha Seneviratne Group Chief Executive Officer of the National Development Bank PLC, discussed the bank’s strategy and how it plans to deliver its five-year Voyage 2025 strategy together with fresh capital infusions, whilst being committed to creating opportunities for SMEs and women’s market segment, through dynamic financial and advisory solutions.
Congratulations on winning two of the most prestigious award titles of Best SME bank and Best Retail Bank Sri Lanka 2021. How do you feel about it?
Thank you for your congratulations. And our thanks go to World Economic Magazine of USA, for recognizing NDB’s efforts in its second edition of awards. Retail banking and SME banking are two arears that the Bank has made great strides in, with a lot of innovative and customer-centric solutions introduced, powered by digitization. So the timing of these awards from World Economic USA is apt. External endorsements always attest to the excellence in our performance, and also motivate us to raise the bar and perform even better.
What are NDB’s mission and strategic vision?
NDB’s vision is “to be the driving force for a financially empowered Sri Lanka”, supported by the mission “to be the catalyst in the financial services industry by creating superior shareholder value and contributing to the national development through the empowerment of individuals with innovative financial solutions delivered by an inspired and dedicated team committed to excellence”. The deep significance of NDB’s vision and mission in the context of the rapidly developing national economy of Sri Lanka is translated into action through the Bank’s carefully articulated and meticulously executed strategies. The NDB Group is currently guided by a five-year strategy spanning up to 2025, with many transformational financial metrics to be achieved together with the ultimate strategy vision of “becoming the Banking Group of Choice of our customers”.
According to the Road Map 2021 presentation by the Central Bank of Sri Lanka, the MSME sector in the country was the worst hit due to the pandemic. What kind of strategic implementations has NDB initiated to help revive the MSME/SME industry in particular?
Strategic implementations in support of SMEs by NDB dates back to its inception in 1979, when NDB was inaugurated as a Development Financing Institution, and also to be the apex body to channel funds received by the Asian Development Bank to needy segments in the country with an aim of national development.
NDB’s competence in this area has been perfected over the past four decades with lending to a wide range of sectors, and SMEs of varying scales, many of who are large corporates today. The Bank has a dedicated business unit – Business Banking to serve SMEs. Our products are not plain vanilla but carefully articulated to support unique business needs with deeper segmentation within SMEs. Financial support is augmented with advisory support by our staff members and also through various collaborations with state and private sector organizations. Key advisory support areas include entering into new markets both overseas and virtual, onboarding digitization in SMEs such as ERP solutions.
Support specific to the pandemic has been diverse, with the prime objective of supporting our customers to maintain resilience and expeditiously recover from the negative effects.
NDB was the fourth-highest bank in the industry in distributing concessionary-rated loans under a scheme funded by the Central Bank of Sri Lanka (CBSL) dubbed as Saubhagya COVID-19 Renaissance Loan Scheme. The Bank also granted moratoria on capital and interest payments for eligible customers, based on CBSL directions and its own accord. NDB Jayagamu Sri Lanka (translating to Bringing Victory to Sri Lanka) is NDB’s latest financial cum advisory proposition, dedicated to empowering exporters, entrepreneurs and inventors, and SMEs at large.
The pioneering initiative by NDB is driven to improve social resilience, empower and support women entrepreneurs, drive financial stability, enable SMEs to expand their horizons through e-commerce, and enhance overall business activity across industries with dynamism. With the ultimate goal to drive trade, boost economic activity and establish financial resilience in the country, the ‘NDB Jayagamu Sri Lanka’ initiative offers a wide range of financial and non-financial services to develop and grow businesses and encourage trade activity. The platform continues to help many local businesses to thrive amidst adversity and the results have been beneficial to the business community and the local economy as a whole.
The initiative provides extensive financial assistance for Sri Lankan exporters as working capital finance to meet the funding requirements of exporters along with facilities such as pre and post-export finance and other trade-related facilities (bank guarantee, letters of credit revolving STLs, FOREX facilities, etc.) Capital Expenditure financing is also offered with concessionary lending rates, funding based on higher LTV on immovable/movable security, funding on acceptable personal guarantees or SLECIC Guarantee, a 25% waiver on all bank charges, approval within 7 working days, and obtaining of buyer ratings through NDB Bank from internationally recognized organizations as well as free 1st shipment with Cargo Insurance Cover up to $30,000 (with conditions applied).
In addition to this, ‘NDB Jayagamu Sri Lanka’ non-financial assistance offers businesses with advisory services such as guidance in finding export markets through Export Development Board (EDB), Sri Lanka Export Credit Insurance Corporation (SLECIC), Chamber of Commerce, Daraz (the Sri Lankan platform of Alibaba online store) and Code 360.com and trade desk to facilitate exporters. NDB will also assist in facilitating links between prospective clients and local trades to obtain services at discounted prices. Further, NDB also offers a comprehensive Enterprise Resource Planning (ERP) solution to its clients which assists in stock and debtor management, payroll management, cash flow management, and other essential accounting functions for SME clients using British qualified advisors. Besides, the bank has also arranged a host of non-financial assistance; including assistance for business registration, patent registration, advisory services on accounting, and legal matters via its industry expertise. Given below are examples of partnerships with experts in harnessing their support to SMEs.
● Maersk Shipping (to support exporters on shipping terms and connect them to the global market)
● Daraz online platform – the Sri Lankan platform of the Alibaba online trading platform and Code360.com (to connect Sri Lankan entrepreneurs to wider selling platforms spanning the globe)
● iLoan Lanka Pvt. Limited (towards providing last-mile financing and enabling better access to trade financing)
● CodeVUS Pvt Ltd (to give customers a value chain management facility through a comprehensive ERP platform enabling them to efficiently handle their day-to-day administrative functions as well as support chains)
● ThinkCube Solutions Pvt Ltd (for Cloud-based Business Application ezBiz for SMEs)
● Export Development Board (EDB) of Sri Lanka, the country’s state-sponsored entity for promoting exports and supporting exporters
If I may elaborate on the partnership with EDB, through this, NDB will be linking the Bank’s customers with EDB and directing them to the “2000 New Exporter Development Program” which will then assist customers to develop their capacity, product, and market of each business. This partnership ensures a host of non-financial and advisory benefits to SMEs.
Would you please elaborate on your retail banking strength?
Indeed. NDB came into commercial banking in 2001, with the acquisition of the Colombo operations of then ABN Amro NV, and went on to become a fully-fledged commercial banking entity in 2005, with the completion of a merger with ABN Amro NV. As such, NDB’s presence in commercial banking, and thus retail banking is relatively younger, compared to many of its peers. Despite the shorter period, NDB’s retail banking services are dynamic and customer-centric with a wide range of solutions to both masses and high net worth customers.
Our products cater from children to senior citizens. Our high-net-worth client proposition dubbed NDB Privilege Banking is the largest in the sector, in terms of deposits under management and number of customers. This is further segmented to offer specific services to the unique needs of this segment which include NDB Privilege Select for ultra-high net worth, NDB Privilege for high net worth, and NDB Elevate for emerging high net worth customers.
Our liability products are diverse with various savings options to choose from for customers, such as savings accounts, salary accounts, investment accounts, an account dedicated for management of tax expenses dubbed as NDB Tax CareTaker, etc. Araliya is the savings account for female customers, within the holistic women-empowering proposition of NDB Araliya.
In terms of loan products, we have a wide range of loan products on offer. Our loan product Dream Maker and credit card NDB Good Life enjoy market leadership positions. Retail loan products are augmented with exceptional customer service and quick turnaround times. Moreover, we bring in a developmental aspect to all our banking solutions, such that our services extend beyond mere banking products, but those that bring prosperity to our clients through advisory support.
Our forte also lies in introducing innovative products to our customers in the rapidly changing customer demographics. This has enabled us to maintain the banking relationship with our customers relevant and vital. We cater to our customers through a network of 113 branches spread across the country. Our services are also accessible from any corner of the world, using NDB NEOS online banking and mobile banking platforms, for a truly omni-channel experience.
Also, congratulations on your alliance with the Norwegian Investment Fund for developing countries (Norfund). Can you share more insights about it and how will it help NDB extend its support to the Sri Lankan economy?
Yes, in 2020, NDB announced a Rights Issue to raise LKR 8 Bn. The Bank was successful in completing this Rights Issue with a 100% subscription rate. The Bank raised a further LKR 1.5 Bn via a Private Placement, with Norfund, and they also participated in the Rights Issue. As such the fresh equity capital infusion netted LKR 9.5 Bn. We are quite pleased with this achievement as the transactions took place through the height of the pandemic and where investor sentiments were below optimum levels given the many macroeconomic challenges. The success in this capital raising initiative and also onboarding a European investor attests to the strong confidence the investment fraternity in Sri Lanka and abroad has placed in NDB’s performance, potential and stability.
We are extremely happy to have the opportunity to partner with a DFI such as Norfund as it seeks to support the SME sector in reviving our economy. The values Norfund will bring in terms of technical assistance, long-term funding, know-how, etc., will help the bank and the country overcome the current challenges. As NDB strives to improve financial inclusion by promoting digital technologies, Norfund can make available its experience and technical assistance to help NDB improve in this area. Further, on the back of the numerous global awards the bank has received in the recent past, this was a further endorsement of NDB’s strong sustainable growth model and our close alignment to global standards.
Tell us about NDB’s digital drive. NDB constantly makes headlines on innovation.
NDB has made timely investments from 2017 onwards, as a part of its strong strategic blueprint to be powered by digitization. Technological and digital innovations take two forms in NDB – one in bringing a more delightful experience to customers, two in enhancing efficiencies in our processes. With regards to customer experience, in December 2019, just before the pandemic set in, NDB relaunched its mobile App with new capabilities and a fresh branding as NEOS. In April 2020, during the height of the island-wide lockdown, NDB upgraded and integrated its online banking platform for an omnichannel experience with mobile banking. And in October 2020, with the effects of the second wave of the pandemic, NDB launched NEOS Pay in its mobile app, enabling QR code-based payments and making the NEOS App inter-operable, meaning even a non-NDB bank customer could onboard and access the App.
The strong digital platform enabled our customers to carry out their banking transactions from the convenience and safety of their homes.
In 2020, the Bank’s digitally active customer base increased to 55% from 35% in 2019. And our digital transactions represented around 80% of total transactions. The mobile app alone recorded a 311% increase in the value of transactions and over a 200% increase in the volume of transactions. Certain months saw over 500% increase in value of transaction versus the same month in the prior year, reflecting the extent to which our customers embraced the NDB digital channels in the context of the pandemic.
Unabated by the onset of the third wave of the pandemic, NDB’s innovations continue. Two more striking industry firsts launched by NDB are the introduction of vKYC and access to CRIB reports on the NEOS App.
Earlier in June, NDB became the first company in Sri Lanka to commence the development of a Video Know-Your-Customer (vKYC) as a part of the significant strides the bank is making in Sri Lanka’s fast-evolving digital landscape. NDB appointed an international enterprise software solutions partner specializing in digital transformation, Axion Solutions, to implement world-class vKYC solutions built by OneConnect Financial Technology Co. Ltd., the leading technology-as-a-service platform provider and an associate of Ping An Group.
With OneConnect’s vKYC, NDB Bank will be the first in Sri Lanka to roll out AI-based vKYC, enabling customers to access banking services such as opening bank accounts, and applying for loans and credit cards remotely and safely so that Sri Lankans can live their lives and run their businesses as usual amidst the COVID-19 pandemic.
Later in June, NDB Bank becomes the first player in the banking industry to tie up with the Credit Information Bureau (CRIB) of Sri Lanka, to create a hassle-free and convenient method in which the Bank’s customers can register and request their credit reports (iReport) and individual credit score reports (CRIB Score) from wherever they are in Sri Lanka through NEOS mobile app. The new automation eliminates visits to a bank branch or the CRIB and any forms filling and has enabled obtaining these reports at a click of a button.
In terms of process innovations, NDB has deployed workflow solutions to a large number of support service processes, thereby considerably reducing the time and resources taken to perform routine tasks. More strikingly, NDB has deployed Robotic Process Automation (RPA) in several processes, revolutionizing how we do things. The financial benefits of these are reflected in a continually improving cost to income ratio for the NDB Bank, which currently is as low as 31% – one of the best in the banking industry and also other corporates. This ratio was as high as 50% about five years ago. Our fee income has also enhanced – in 2020 fee income grew by 12%. All these contributed towards an increase of 8% in post-tax profitability, quite commendable performance given the effects of the pandemic.
In addition to these, the Bank also invested in a state-of-the-art call centre technology. New features include a chat option for customers with service agents, for speedy turnaround time in customer support.
NDB is also currently on a core banking system upgrade to R20 of Temenos, which once implemented will provide exceptional processing capacities and energize the Bank’s digital drive.
Increased digitization and automation led to a 40% decrease in paper consumption in 2020 with a considerable reduction in energy consumption, benefiting the environment.
Sri Lanka being such a crowded banking market, how does NDB differentiate itself from its competitors?
As you’ve rightly said, there are 30 banking institutions in the country, of which 24 are licensed commercial banks, like NDB. Sri Lanka’s financial services sector also has finance companies, who offer services to customers with deposits (excluding current accounts) and loans products and there are around 40 of such companies, hence yes, the sector is quite crowded.
There are two components that I see as hoisting NDB over the competition. That is digitized smart solutions and a strong commitment to customer service excellence. I touched upon NDB’s digitization drive before, and this has been one of the major differentiators for us. In a sector where products offered are more or less homogeneous, the convenience factor brought in by digitization has become a game-changer and transformer in the current context.
Customer service excellence, stems from customer centricity which is an overarching component of the NDB Group’s strategy. NDB’s strong commitment to customer excellence is what has enabled it to maintain a competitive edge. The strong growth rates of the bank over the years and the gradual increase of its market share exemplify this.
Customer excellence is a way of life at NDB. All employees are inducted to excellence in customer service at joining the Bank. There are various processes in place to ensure the momentum is maintained. Appointment of Customer Service Champions in each business line and support service function, a laid-out Standard Operating Procedure (SOP), All Staff emails where customer testimonials on service excellence are shared as a motivator for all staff – are some processes in place. We have deployed technology also, in enhancing customer service. A state-of-the-art customer contact centre, with recent investments, is an example. The amalgam of our customer-centric products offered across the NDB Group covering both banking and capital market services and digitized modes offering an omnichannel experience fortify NDB’s service excellence.
Mr. Seneviratne, NDB has always been vocal about creating women empowerment opportunities. Can you provide any additional information on this?
Empowering women is a key strategic item for NDB. In 2017, NDB conducted extensive research into the women’s market segment, as a part of its then mid-term strategy with the professional consultation of the International Finance Corporation (IFC). The findings of this research laid a strong foundation towards developing a unique financial and advisory proposition for the women’s market segment. Branded as NDB Araliya, the proposition caters to three sub-segments namely, homemakers, salaried women, and women entrepreneurs. NDB Araliya comprises business loans, current and savings accounts, and credit card facilities. Together with strong advisory NDB Araliya is supporting aspiring Sri Lankan women in realizing their goals.
In 2020, NDB embarked on a novel initiative dubbed Sri Lanka Vanithabhimana (translating to “Pride of Women”) as a part of its women empowerment blueprint. This initiative saw NDB collaborating with the “MTV/MBC media partner” a leading media channel in the country, is conducting a national level contest for women, across eight categories of Sports, Entrepreneur (Small Scale), Entrepreneur (Medium Scale), Young Leader, Environmental Management, Social Worker, Education and Upcoming woman entrepreneur – Business. NDB Vanithabhimana was an opportunity, unlike ever before, for hidden talent amongst Sri Lankan females right across the country to step into the limelight and showcase their talents to the country.
This initiative is the response drawn by NDB, in response to a gap the Bank identified in its aforementioned extensive research into the women’s market segment. The gap identified was that there is no formal recognition scheme for women in acknowledging their contribution and encouraging them to perform better. Sri Lanka Vanithabhimana was launched in response to this gap and also based on learnings from foreign peer banks who had excelled in serving the female market segment.
Initial competitions under Vanithabhimana were held on a provincial basis (for 9 administrative provinces of the country), from which, the first-place winners under each category proceeded to the national level contest to be crowned as the national level winners. Winners were selected through the evaluations conducted by an esteemed panel of judges that represented myriad fields including entrepreneurship, environmental conservation, gender equality, and women empowerment, sports, academia. The panel also saw representation from the Bank’s Senior Management. The physical events were affected by the restrictions imposed in the country in response to the pandemic. But our efforts were unabated, as we swiftly moved the events to virtual mode. The culmination of the event took place on the International Women’s Day of 2021 as a national-level in-person event (with relaxed health guidelines by this time in the year), where many high-performing females were recognized.
Adding on to NDB’s commitment towards empowering women, NDB is a member of the Financial Alliance for Women (FAW), a leading global members’ network of financial organizations dedicated to championing the female economy — the world’s largest, fastest-growing market, and yet one that remains untapped. As a unique network with members from over 135 countries, FAW shares the ambition of unlocking the full value of the female economy.
The Bank draws many insights, expertise, and exposure by participating in FAW’s knowledge sharing sessions and workshops, which feature best in class practices in empowering the women’s market from across the globe. These insights have enabled NDB to augment its solutions to the Sri Lanka women’s market segment. The Bank in turn is a frequent knowledge contributor at FAW’s conferences, publications, etc., wherein it shares its success stories and endeavors in the segment to a worldwide audience.
NDB is charting a unique course in the Sri Lankan financial services sector as a Banking Group of companies. Please tell us about this unique proposition enjoyed by NDB.
NDB is the only brand in Sri Lanka to head a financial services group that combines banking services and capital market services under one brand. The NDB Group comprises dedicated subsidiaries engaged in a range of capital market services such as full-service investment banking, wealth management, securities trading & advisory, and private wealth management. This proposition strengthens our product portfolio offered to our customers, where they have a wide choice to select from, may it be enhancing their wealth or expanding their business, considering an IPO, or raising debt for the business when it is reaching the next big growth milestone. The subsidiary companies of the Group are market leaders in their own right, with NDB Investment Bank Limited being the undisputed market leader [adjudged as the best investment bank in Sri Lanka by EuroMoney for nine consecutive years] and NDB Wealth Management Limited being the largest private fund manager in the country with assets under management in the range of LKR 180 Bn.
This Group structure has enabled the Bank to offer a unique product that combines features of a commercial banking product and wealth management product. Branded as “NDB ONE Account” the product features an asset as well as a liability component. From the asset perspective, the customer can maintain a current account with the Bank with a pre-set maximum balance, and have any excess funds to be automatically invested in the NDB Wealth Money Plus fund at day end, which is a lucrative investment option offered by the Group’s wealth management arm – NDB Wealth Management Limited. If the customer at any point decides that they should invest the funds in the NDB Wealth Money Plus fund in full or in part in a Bank Fixed Deposit or any other savings deposit the customer may do so at the convenience of instructions given to the Bank.
Conversely, the customer can obtain a loan or an overdraft facility up to 90% of the investment in the NDB Wealth Money Plus fund, whilst pledging the same as security. As such “NDB One Account” is a flexible product that allows customers a variety of investment and financing options through a single account. The holistic proposition offered by NDB is augmented by technology. The NEOS mobile app is a single point for viewing portfolios held at the Bank, NDB Securities (the securities trading arm), and NDB Wealth Management. The Group structure also leads to large synergies. Considering all this, NDB enjoys a unique competitive advantage over its peers, as a financial services powerhouse in Sri Lanka’s financial services market.
On a final note, what are the aspirations and plans of NDB in to the future?
With the new capital infusion through the Rights Issue and the Private placement, NDB is powered to perform and deliver on its five-year strategy Voyage 2025, which will take NDB to greater heights in the Sri Lankan banking and financial services sector. Digitization will remain a core strategic priority in our growth journey. In the digital evolution, NDB is in a more advantageous position, given its compact size and agility of the relatively young team. So we see ourselves further advancing in this area. We are cognizant of the challenges that may evolve with the direction and the intensity of the pandemic. NDB has withstood many economic cycles in its existence for over four decades. With this expertise, NDB remains committed to delivering support to all its customers in maintaining financial resilience and prospering in their ventures. In doing so, the Bank is committed to supporting the overall national economic development, staying true to its identity.