With the introduction of digital transaction facilities, human interaction will be limited in many sectors including the banking sector and therefore, it is necessary to embrace technology in going forward, Senior Deputy General Manager, Consumer Banking, Sampath Bank PLC, Tharaka Ranwala said.
“The banking sector will undoubtedly evolve for the better over the next five years. Technology will replace many of the low skilled, mundane tasks, and the whole model will change to become extremely customer centric. Banks will transform to become financial solution providers from financial product providers,” he said in an interview with Business Observer.
Excerpts:
Q.Give us a brief account of your role in the bank and how it contributes to the growth of the bank.
A. I am the Senior Deputy General Manager - Consumer Banking and look after all bank operations, branch banking, marketing and deposit mobilisation. This covers the entire retail operations of Sampath Bank.
The retail area is the most profitable, yet, a difficult area to manage because any ups and downs of the economy and market conditions have an impact on this area. Therefore, it is an important area in the bank.
Q. Can you share with us key decisions you have taken in your banking career to change the outlook of the banking sector?
A. It is difficult to say whether any key decision/s that I have taken in my career have had an impact on the outlook of the banking sector because it is my belief that no singleperson can single handedly create an impact in any sector, leave alone banking sector. It is always teams that make an impact in any sector that they work. However, an individual may play the role of the leader giving direction and guiding the team.
Given that, maybe I could share few ground breaking strategic decisions that I have taken in my career which allowed my team and me to make an impact on the banking sector. One such decision was about seven to eight years ago, when I was heading the Card Centre, the bank took a strategic decision to drop more than twenty different charges that the card holders had to pay to the bank and restrict ourselves (Bank) to charge only upto a maximum of four charges.
This was never heard of in the industry and may be a world’s first. Even today, Sampath Bank has the least number of chargesfor credit cards. This decision at that time changed the way the banking sector looked at the card business.
Another example is in the operational and retail areas where we are converting customers’ normal/regular banking transactions that they do over the counter to digital transactions. This has enabled us to convert more regular transactions of customers to digital transactions. This has changed the entire banking landscape.
Q. There are a number of successful business people who were initially supported by the bank. Do you plan to encourage others to become entrepreneurs?
A. We as a bank always believe that it is not only loans or banking services that we should provide to our customers, but also share insights and knowledge we have as bankers to succeed in their respective businesses. Over the years, a number of SMEs and entrepreneurs who have been helped by Sampath Bank have become successful entrepreneurs. In essence, we go beyond just providing banking services. Therefore, we always encourage this entrepreneurship culture to be inculcated in people so that we as a country can benefit out of people who start on their own or go after achieving their own dreams.
Q. Today, we are talking a lot about innovation and creating an entrepreneurial culture in Sri Lanka. What are your thoughts on these, how would you contribute to this trend?
A. I believe the country needs more entrepreneurs. However, whether from a policy framework we support entrepreneur spirit I am not sure. That is why I believe that there should be more institutions and professionals looking at start-ups. Crowdfunding and angel finance are things we need in this country. If you look at Sampath Bank, in our little way we do support entrepreneurs. That is why we actively become a part of entrepreneur development programs such as ‘Eth Pawura’ and also have entrepreneur development as one of the flagship CSR initiatives of the bank under the brand Sampath Saviya.
Q. Given your vast experience in the sector, what is your advice for women who plan to become career bankers?
A. For a woman to become a career banker in this country is a tough thing because as a career banker your role is increasingly demanding. A woman is seen as a foundation of a successful family and contributing to your career and running a successful family is a tough task. A career banker should plan and have a clear objective on what she wants to achieve.
To this end having a mile stone plan in every step of her life giving herself a balance in family and career life is necessary. Most women today have a career objective but, they fail to align it with family/personal objectives.
I believe if you plan ahead with a clear set of objectives it will help balance both career and family responsibilities.
Q. As far as business in Sri Lanka is concerned, what are the areas you would like to see improvements and value addition? Can we always depend on a few sectors? The economy depends on foreign exchange earned by expatriates and women based Industries. Should there be a change?
A. I would say in most areas. When we speak of improvements, we need a benchmark. And the benchmark should be global standards because that is where we must compete ultimately if we are to achieve the 6-7% growth that we are aspiring to. And there are Sri Lankan companies and industry sectors that have done it. We should support more and more industries and companies to get there.
About depending on sectors, we shouldn’t be too dependent on any sector. The best is to diversify. But this is easier said than done.
About women based industries, that shouldn’t be how its classified. Women are part of our workforce. So them being part of an industry that is doing well is good. What we should focus on is, why other industries are not doing as well.
We should also seriously consider if sending our female workforce for manual labour overseas is the most rewarding thing for the economy. We often hear complaints from industries about labour shortages. What we should do is to find out why these industries have failed to attract the labour that is flowing out and address those issues to retain the labour here in more productive jobs.
I also think that while earning foreign exchange for a country is a good thing we shouldn’t over depend on one industry category. For eg. We shouldn’t solely depend on foreign exchange earned through Middle East workforce of women. I am also a strong believer that we should focus more on skilled workers going/sending to earn foreign exchange than manual labour.
Q. In Sri Lanka, all the banks are expanding by opening branches all over the country. Is this a healthy situation?
A. Well, this was the case a few years back. But the CBSL has very prudently restricted branch opening now and banks are encouraged to open branches only in areas where bank penetration is low. Sri Lanka’s private credit penetration as a percentage of nominal GDP was only 38% in 2018, whereas in most other developing countries it is around 60-70%. This gives a lot of room for growth for banks that penetrate unbanked areas.
Opening up branches is the traditional model. With the increased penetration of smartphones and internet, digital channels are fast becoming the preferred access point. Sampath Bank has also launched agent banking model targeting those who are not very tech savvy in these under banked areas.
Q. How do you think the Sri Lankan education system should be changed to focus on economic challenges?
A. Education reform does not fall within our area of expertise. However, to answer your question, looking at emerging business and technological trends, we feel there should be more focus on encouraging and nurturing creativity in education. Ability to imagine and design solutions will be the need of the future. In addition to that, there is also a lot of focus globally on STEM education (Science, Technology, Engineering, Mathematics). Secondly the focus on developing the curriculum, Teacher Training and Education Resources should be given priority and be done by experts in those fields.
Q. Sri Lanka is critically affected by climate change/ climate based disasters. What role the bank would be playing to face the challenges of this situation?
A. For banks, this is increasingly becoming part of our risk assessment. When granting loans now, we not only have to look at the business and other traditional risks, but also the geographical risks (where the business will be located), proximity risks (what are the industries/other activities near the business), and end market risks (risks associated with where the end customers are located).
Thus, taking measures to mitigate such risks becomes part of bank’s interest. Therefore, banks work closely with clients in ensuring sustainable practices, educating them to identify potential risks early, and encouraging them to contribute to the natural environment in all the above risk areas.
In addition to the above proactive measures, we naturally take part in post-disaster rebuilding efforts, providing financial support to affected communities and clients, and CSR activities.
Q. With most foreign banks downsizing its staff, what will be the job availability in the banking sector in the next few years due to technological deployment in its operational process?
A. Yes, most of the routine and monotonous tasks of the industry are fast becoming automated or digitised. However, the need for downsizing is highly correlated to which stage of evolution the banks are. For example, most of the foreign banks you mention are global in size and achieved that growth in the late 20th or early 21st century, when they needed a large amount of human capital to reach that level. With the emergence of the digital era, these large banks found it increasingly difficult to compete with smaller efficient banks on one side and that digital technologies can take out the requirement for large pools of human capital on the other. This resulted in downsizing. None of the Sri Lankan banks have reached that stage yet. So the pressure on local banks is much less.
Having said that, we also foresee a lesser need of human resources for routine and mundane tasks in future, as these could be automated or digitized. But the requirements for advisory roles, technology related fields, customer relationship management, financial engineering, consulting, etc. will only increase and technology will complement such roles.
Q. How do you think banking sector in Sri Lanka should be changed over the next five years with the technological changes happening in the banking sector? Do you think the future of banking profession will depend on machines more than people?
A. Banking sector will undoubtedly evolve for the better over the next five years. Technology will replace many of the low skilled, mundane tasks, and the whole model will change to become extremely customer centric. The banks will transform to become financial solution providers from financial product providers. And the solutions will be tailormade to suite each customer’s needs. To provide this to a multitude of customers, investment into technology will be a prerequisite. However, banks will have to balance the investment requirement with current profitability to achieve the best returns for all stakeholders both in the present and in the future. Thus, the banks will have to perform a delicate balancing act during the next five years, which will be a transition period for the whole industry.
As for the future banking profession depending more on machines than people, I feel the human involvement will continue to be important and it might even be more so. But the roles played, the skills required, and the knowledge needed might be completely different. Humans working intelligently using the information generated through/using technology will be the future.