MARKET
Banking is often compared to the packaged goods business, where services have become virtual products and are marketed using the traditional techniques of packaging, promotion and distribution. The reason for this is clear. Banks offer services that have become commoditised. Accounts – whether they are interest bearing or current accounts, and even loans and credit cards – offer very similar features. As such, the banks differentiate themselves by branding their unique attributes and communicating them in a highly competitive marketplace.
So how competitive is banking in Sri Lanka? Just take a look at what the banks spend to simply stay in business. In 2005, the nation’s financial sector spent over Rs. 1 billion on marketing and advertising, which is substantially higher than most other industries. (Source: SRL MediaScan 2005).
In a market that generally sees just a handful of competitors in any particular field, from FMCGs to services, Sri Lanka boasts over 40 banks and financial institutions. Many observers, in fact, feel that the country is highly overbanked and the market has reached saturation point. There is fierce competition in this relatively small market and the big players include many international names that keep adding to the list.
At a macro level, this market saturation poses many opportunities as well. Sri Lanka may be a small island of some twenty million people, but its geographical, demographical and economic demarcations can be intimidating to new entrants – especially to those that are not rooted locally. The country is still burdened with a rural economy, with a fair share of the population still living below the poverty line. But the Colombo-centric economy may seem attractive, since even the rural farmer is drawn to participate in it and must therefore interact with the banking sector.
But this is where competition takes a turn. The banking industry, in general, finds it profitable to focus on big businesses in Colombo and major towns, but is faced with substantial operational expenditure when it pursues rural customers. Local banks such as Hatton National Bank (HNB), however, don’t face such daunting hurdles, thanks to a wide and deeply rooted branch network across the island.
Sri Lanka’s open economy sees more and more people from all sectors – both rural and urban – seeking opportunities for growth, and HNB is ideally positioned to leverage its strengths. In the light of this, the bank’s Superbrand status is a fitting tribute to its success story.
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ACHIEVEMENTS
HNB has all the hallmarks of a Superbrand – not just by virtue of its leadership status in the banking sector, but by the way it has integrated itself into the very fabric of Sri Lankan society. True to its promise, the bank is a partner in progress for over one million people. Notably, this includes hundreds of thousands of rural people who have been brought into the formal economy by a bank that chooses to tread the difficult but often less profitable path – a bank that has made a genuine commitment to uplifting the standard of life in Sri Lanka. HNB’s islandwide network of over 150 customer centres is testimony to its pioneering efforts in areas which have been stifled by poverty.
In a banking tradition spanning over 100 years, HNB has won many accolades. One among them is testimony to the bank’s triumphant legacy. With a large percentage of the world’s population still below the poverty line, the international community has been searching for a practical micro-finance model. High costs and risks, and the resulting low returns, have made most banks shy away from micro finance. 
HNB, despite being a profit-oriented private bank, showed its commitment to the Sri Lankan people by launching micro financing in 1989.
The model, aptly named The Village Awakening, today involves more than 250,000 people from over 50,000 families. It has opened the doors to a new lease of life, so to speak, for many Sri Lankans. The World Bank has hailed this novel model because it proves beyond doubt that banking products can be offered to the poor in a viable manner.
Among the other accolades, HNB emerged as winner of the National Business Excellence award for Banking/Insurance in 2004 and was runner-up at the National HR awards in the same year. For over ten consecutive years, its annual report has maintained its position as sector winner. HNB is currently placed among Sri Lanka’s ten leading listed companies in an annual ranking compiled by LMD, the country’s premier business magazine.
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HISTORY
HNB began as Hatton Bank in 1888, a planters’ bank right in the heart of the tea country in the central hills. This was a good 60 years before Ceylon (a name synonymous, of course, with tea) earned its right to be independent. Tea was on its way to international fame and needed a bank to keep its wheels of growth turning. Hatton Bank consolidated its partnership with the architects of the country’s economy, which was hugely dependent on tea exports. In 1948, when Sri Lanka gained independence from British rule, Hatton Bank also changed course – with an eye on the economic activities of Sri Lanka’s post-independent era.
Brown & Company, a respected engineering entity, acquired Hatton Bank and prepared the small bank for what would become a trailblazer and a stimulus for a banking revolution in Sri Lanka.
In 1970, Hatton Bank annexed two hill-station branches of the then National & Grindlays Bank and re-launched itself as Hatton National Bank, signifying its new role as a national player. HNB made its intentions clear, when around the same time, it opened five branches – a massive intensification of its commercial activities. The bank went public the next year, with a 35% share offering to its customers, thereby broadbasing its ownership.
HNB’s progress was both swift and spectacular. A network of correspondent banks, arrangements with overseas banks, new branches and a wide range of products kept it at the forefront of banking in Sri Lanka. Today, the bank’s state-of-the-art, high-rise headquarters is a landmark in Colombo, in the same way that its services are unmistakably Sri Lankan.
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PRODUCT
HNB offers a variety of banking products and services to complement the diverse needs of a growing nation. Instead of one-size-fits-all product offerings, the bank has added value to its savings account portfolio, branding it in different categories that cater to the diverse segments of its customer base. There are savings accounts tailor-made for adults, others that are customised for children, young families and even senior citizens. And the bank’s housing, educational and vehicle loans are helping more and more people achieve their goals in life.
HNB pays special attention to youth, with products designed to help them grow to become successful leaders. These include teen credit cards, special savings accounts, and education-driven and incentive-based growth accounts. On the technology front, HNB has been on the cutting edge of innovation for many years with a nationwide ATM network, on-line banking and telebanking facilities.
The bank is also highly accomplished in the sphere of corporate finance with facilities such as Asset Finance, Property Finance, Structured Finance and Trade/Commodity Finance. Its loan portfolio also includes Working Capital and Variable Rate Fixed Rate Loans. And HNB acts as a licensed dealer in government bonds.
Other key product enhancements and innovations include internet banking services, a payment portal, virtual banking, mobile phone top-ups and leasing. Recognising the enormous contributions that migrant workers and the Sri Lankan community abroad make towards the economy of the nation, HNB has established strong ties with exchange houses and agencies. This facilitates inward remittances from nations the world over almost instantly. HNB’s trade services operations, which received ISO9001:2000 certification from the Bureau Verities Quality International, are centralised to provide an efficient and effective service to the bank’s clients.
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RECENT DEVELOPMENT
For a bank with a history of almost 120 years, HNB has stood the test of time by changing with the times. As part of its constantly evolving process, the bank recently unveiled a new corporate identity. With this change came a new logo and corporate colours, heralding a new order in customer relationships.
HNB has also invested substantially in a new international IT platform, custom-made to offer enhanced benefits and product features to customers. The bank also streamlined its nationwide operations, bringing together different departments and functions within one centralised and hi-tech environment. These measures are expected to reduce operational costs, and allow greater flexibility and timely delivery of customer solutions.
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PROMOTION
HNB’s approach to marketing and advertising has, in effect, changed the modus operandi of banking in Sri Lanka. The bank was the first to brand an account, backing it with a strong public promotional campaign and offering valuable prizes. HNB’s flagship Pathum Vimana savings account draw still attracts huge public interest – and many other banks have now turned to promotions as a means of attracting customers. HNB’s aggressive and ground-breaking advertising strategies have paid rich dividends, with its products playing a leadership role.
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BRAND VALUES
The bank feels the pulse of the people and its products have enhanced the lifestyles of millions. The phenomenal success of HNB’s brand is testimony to how it closely integrates into the lives of Sri Lankans. Its relentless quest to offer people what they want and its corporate image – which is akin to a national institution rather than a profit-making private company – have made HNB a household name in Sri Lanka.
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THINGS YOU DONT KNOW ABOUT HNB
♥ HNB was the first and only Sri Lankan bank to be listed internationally on the Luxembourg Stock Exchange.
♥ It was the first commercial bank to introduce housing loans.
♥ Amongst commercial banks, it was the first to introduce pawn broking services, personalised credit cards and affinity cards.
♥ It was the first commercial bank to brand a financial product (Singithi Minor Savings Account). Currently, some 500,000 Singithi jumbo tills serve as mini-banks for children all over Sri Lanka.
♥ HNB also introduced the most successful micro-finance programme in the country (Gami Pubuduwa – Village Awakening).
♥ On a clear day, from its headquarters in Colombo, Adam’s Peak – in Hatton, the birthplace of HNB – is clearly visible.
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www.hnb.net
