Elaborating on the Small and Medium Enterprises Sector of Sri Lanka,Senior Executive Vice President – SME Banking at Nations Trust Bank, Bandara Jayathilake discusses the efforts that the Bank has been making over the past years to become the ultimate banking partner that facilitates and mentors growing entrepreneurs in the country.
“Any business with a turnover of less than LKR 750 Million falls into the category of Small and Medium Enterprises.SME isa key focus area for Nations Trust Bank as we recognize it as a sector that can really unleash the potential we have in the country. 85% to 90% of businesses in Sri Lankaare SMEs which play a significant role in facilitating the country’s economic growth while also providing 70% of employment.” said Bandara Jayathileke.
Adding further, Bandara Jayathileke said, “Many believe that the primary concern of SMEs is overcoming their financial inadequacies which is a misconception. SMEs manage to source their capital from self-savings or through aid from family and friends. However, the rate of failure for SMEs remain very high with 75% closing down within seven years. This is simply due to the lack of market research, planning, due diligence and most importantly the inadequate guidance they have before starting a business. Understanding this scenario, we have come forward to be a banking partner that can help SMEs thrive in their businesses by facilitating them financially and as well asproper mentorship and advocacythat will ultimately contribute to reduce the high fallout rate of SMEs in the country”.
Commenting on howSMEs can increase their chances of success to retain themselves in the industry,he explained that, “Fresh entrepreneurs should not just start a business without having educatedthemselves about the market, competitors and financial management. They should acquire the knowledge for themselves or be prepared to hire people with those skills. During our time in establishing the Nations Trust SME banking sector, we realized that our employees should be trained in order to guide the SME customers to overcome their real time obstacles. Therefore, we partnered with the German non-profit organization Frankfurt School of Business to structure trainings for our staff. We launched our SME training academy with curriculums from the Frankfurt School of Business and lectures were delivered toequipour team with the skills needed to guide and mentor SME clients.We have now completed over 100 seminars and have partnered with university professors and industry specialists to share their knowledge and discuss issues such as branding, capturing export markets, tax planning and post budget analysis.”
Raising a concern on where the Sri Lankan SMEs stand in comparison to the global counterparts, Bandara Jayathileke stated “Sri Lankan SMEs are lagging behind in terms of technology, mechanization and automation. We still rely heavily on manual labour. Even though, mechanization requires significant initial investment, it streamlines production allowing massive increases in productivity and cost efficiency.This is why we often find imports cheaper as mechanization in source countries has reduced their cost of production and increased their competitiveness in the global marketplace.R&D is also essential for growth but investment in R&D is sadly low among Sri Lankan SMEs unlike their global competitors.This must change because we can’t develop products and then look for markets; instead we need to understand what the market wants and then deliver”.
Discussing technological advancements that continue to influence the SME sector, Bandara Jayathileke further added that, “The entire SME landscape is changing. New sectors such as software development are emerging which have the potential to eclipse traditional industries in terms of export earnings. Most existing businesses are now handled by tech savvy millennials. Given these factors and the high rate of IT penetration in Sri Lanka, we are seeing massive demand for digital banking, which is a key focus area for Nations Trust.We have spent a lot of time and resources developing digital channels to reduce the need to visit the bank and fill in lengthy documentation thus reducing overall costs.We have introduced a wide and varied set of digital offerings that include internet banking, mobile banking, cash management solutions and now FriMi, which is Sri Lanka’s first digital bank and also a revolutionary payments platform. FriMi is a very attractive proposition for small businesses as becoming a merchant on the platform is easy and a simple printed QR code displayed at the POS can be used by customers to make payments on FriMi.
Setting Nations Trust’s SME services apart from others is the Bank’s drive to personalized servicing, “SMEs, like all businesses, go through good times and bad. It’s at crucial times that in such scenarios we really want to get involved and help owners understand where their business is going wrong and guide them to make good decisions whilst steering them away from a financial debacle. Most business owners don’t see that there is a problem until it’s too late but our intention is to make them aware about future threats before it escalates out of control. We always strive to go that extra mile simply because we want to be more than a lender; we want to partner with them in these important decisionsand our clients appreciate these efforts”, claimed Jayathilake.
“We have also changed our business model and this has resulted in 2017 being a great year for us. The major change was stakeholder engagement wherein both the drivers and the handlers of business worked together living up to one of our core values of ‘winning together’ and it has been a revolution; one team with one dream with shared KPIs and a common dashboard. The results of this change are clearly visible in our bottom line and also from the response we are receiving from our customers.” said, Bandara Jayathileke.
Nations Trust Banks’ customers will be offered a wide array of initiatives and it was elaborated “In 2018, we will continue our major initiatives and work to consolidate our existing relationships while building new ones. We will focus on digital banking with a vision to have most of our transactions coming in through digital channels in the near future. We will also continue to enhance our own skills through training and build on our spirit of winning together as one team. Nations Pera Maga, our micro financing proposition, which launched in 2017 has seen great results and we will be looking to expand and consolidate those services too. Medium to long term we are looking to categorize markets regionally and tailor solutions to those regions; paddy cultivation in Kaduruwela for example or gem mining in Rathnapura. Instead of offering a vanilla service across the board, we will look at tailoring solutions to each region, adding value and growing our SME business much further”, said Bandara Jayathilake.