Futureproofing the banking sector through a digital-first mindset


There is a good reason why digitalisation is a top priority for banking. When done correctly, it enables paradigm shifting improvements in customer experience and accessibility. For the average customer, it means, they are able to utilize the full range of our products and services seamlessly, through the platform of their choice.

While prior to COVID-19, all of the basic tools necessary to transact in a digitally empowered manner were already in place at HNB, on average, Sri Lankans were generally wary of adopting digital banking. The rationale was simple: if it isn’t broken, why fix it?

After the pandemic, this dynamic changed forever. Everyone across the globe was forced to grapple with the same unprecedented set of challenges. Locally, all of us – either directly or indirectly – were compelled to rely on technology in order to do everything from shopping for groceries to working or studying from home. With these trends, customers are also opening up to digital banking with greater enthusiasm than ever before.

Sharing insights from their ongoing efforts to futureproof the bank, HNB Chief Technology and Digital Officer, Rohan Buultjens elaborated on the systems and culture at the foundation of HNB’s bold vision to transform banking in Sri Lanka.

Q: What are some of the most important factors for companies to consider when driving ambitious digital transformation?

A: When it comes to digitalization there is no room for half measures. To succeed, you have to take an all-in approach. Typically in such projects, physical investments are the first consideration. Installing new systems, upgrading legacy systems, and building new infrastructure capacity is of course crucial. But organizational culture, and team and individual mindsets are what ultimately makes or breaks digital transformation.

Therefore, it’s not enough to simply ‘Act’ digital, you have to ‘Think’ digital. Just because you’re able to set up a façade where customer interfaces are digital, internally if you’re still running on paper files, and your people are not engaged with the systems you have set up, then seamless, frictionless digital experiences become impossible.

HNB’s approach to digital transformation got a major upgrade back in 2014. At that time, we spent a lot of effort simply evaluating our technological infrastructure, and our processes across front, middle and back-office functions. We also focused on what our customers had to say and used tools such as digital marketing and social media to further refine this understanding. In this manner, we were able to map out how a customer moves through our organization in order to access the services they need, and how we responded to those needs.

At the same time that we started gearing up for transformation of our physical infrastructure, we also started trying to push the organizational culture into a digital-first mindset. Of course there was some resistance, and especially in banking industry veterans tend to be strongly risk-averse. But with training, discussions, and a sincere effort to take on critical feedback, we also started to seed in the digital-first thinking necessary to pave the way for true digitalization.

Q: How has the banking sector in Sri Lanka faired in digital transformation, and what do you think should be the main focus areas for the journey ahead?

 A: The Sri Lankan banking industry has only hit the tip of the iceberg in terms of digital transformation. Digital transformation is not an easy task, and while some banks are currently working on it, some are attempting it, and some are yet to begin.

For the most part, Sri Lankan banks have been focused on digitizing customer interfaces, and providing technological alternatives for most front-office functions. Meanwhile, many have their middle and back office functions still running manually, or with a slight technological assist at best. For HNB too, this was one of the most challenging but also rewarding components of our digital transformation.

For the Sri Lankan banking industry, digital services which would account for about 30% of the portfolio, with the remaining 70% accessed in person. Especially with opening of new accounts or taking a loan; the customer had to be the branch with various documents, usually across multiple visits.

With the establishment of our digital Centers of Excellence, we were able to centralize all administrative and back-office functions, which enabled a radical shift in our branch operations. Instead of processing documents and forwarding them to the main office for verification and approval, these functions were automated. This empowered branch teams to focus much greater attention on building relationships, understanding customer pain points, and clearing any roadblocks that they may have faced.

With such a framework in place, banks will offer customers access to a whole new range of products and services within the comfort of their homes. The onboarding of customers, for example, will be completely online by the end of this year. After that, individuals who wish to open a savings account can provide the bank with the necessary details, including an image of themselves and the NIC, which will be digitally verified.

The prospective customer will then be transferred to a contact centre for a one-on-one interview via video call to verify the details. Once the details are corroborated with the department of registrations together with the NIC, the account will be opened.

Our goal is to offer our customers easy and secure access to their daily transactional needs while setting the groundwork to be their partner in achieving long term financial goals. We want to provide a frictionless and seamless customer experience, from opening a new account or transferring funds to obtaining loans and other banking services through any device from a mobile phone to a laptop or tablet.

Q: What are some of the benchmarks in digital banking in the SAARC region that Sri Lanka can learn from?

 A: Generally speaking, conditions on the ground in each country in the SAARC region varies immensely, so each will have its own unique requirements and challenges.

However, we can certainly look to the remarkable work done in India to digitize every aspect of the customer journey.

At the foundation of these advancements in digitalization was the Aadhaar card, which is today the world’s largest and most sophisticated biometric ID system. Such systems make authentication much more efficient and reliable, which has positive implications in every aspect of life, including banking. There are similar efforts under way to create a digital NIC card for Sri Lanka. If successful, it will certainly act as a catalyst for more sophisticated digital banking products and services.

Q: What are the implications of digital transformation for SMEs and the economy at large?

A: Digital banking means that your business is no longer restricted by geography. Depending on your product or service, you gain the ability to receive payments from people all over the country. This exponentially expands the size of your market. Even with the lockdown measures in place, those that are able to continue operating, leveraging on online delivery services and digital payment platforms.

This empowered them to seamlessly continue their business and receive payments from customers, and pay their own suppliers, without having to meet face-to-face or even use hard currency. Logistically, this is a major advantage for them. They save money, time and resources which they can redirect into growing their productive capacity.

Another crucial benefit is direct cost. Digital banking services like what we have enabled through SOLO reduces the transaction costs that would be associated with card payments. This makes it more convenient, and cheaper to use than a card system, opening up a whole new channel to deliver products and services to consumers locally and even overseas.

Taking a more medium-long term view, the implementation of digital banking systems automatically creates data on business transactions. This allows for SMEs to become more systematic in management and helps optimize operations, all of which is useful when seeking loans, or investment.

HNB of course has a rich history of working with SMEs, and over the past year, we have continued to innovate new services that are designed to even the playing field. HNB’s AppiGo platform is a great example of this digital first mindset in action. With AppiGo, we gave small business an effective, low-cost route to rapidly set up their own e-commerce websites, so that they could promote their businesses via social media, and take orders through their own website.

When scaled to a national level, such innovations can yield a more vibrant, agile, and resilient SME sector. Such digitally empowered enterprises can have a drastic positive impact on the national economy. As a result, we may see a new breed of tech-savvy SMEs emerging from this pandemic.

Q: What are some of the new technologies that HNB will be exploring in future?

 A: In the journey towards increased customer-centricity, we have continuously invested in technology that brings greater understanding, and responsiveness to the needs of our customers. We take a holistic view towards our products and services and we are aggressive on establishing the necessary technological infrastructure to adopt new capabilities across the organisation. The only rule, is that it must effectively serve the needs of our customers.

By combining automation, Artificial Intelligence (AI), Robotic Process Automation and other emerging technologies, banks can offer digital financial assistance to facilitate seamless and frictionless transactions. For our customers the result will be greater convinces, value, and security.