HNB leverages next-gen trade finance solutions to transform Sri Lankan businesses into global exporters

Following three years of historic volatility and uncertainty, stability appears to finally be returning to the Sri Lankan economy, as a series of painful macroeconomic and fiscal emergency adjustments start to take effect. While these measures have helped to ease Sri Lanka’s economic downturn, a meaningful recovery ultimately hinges on the nation’s ability to expand and diversify its exports base. 

However, persistent high inflation and sharp increases in finance costs stemming from the tightening of policy rates have created major obstacles for businesses of all sizes. 

According to HNB Deputy General Manager – Wholesale Banking Group Damith Pallewatte, Sri Lankan businesses – especially those that have already found moderate success in overseas markets at different scales – have the potential to break into high-value niche markets across the globe, and help fuel an export-led economic recovery – from the grassroots up. 

But to do so, they will require targeted support – including export financing and equity infusions – as well as access to certifications and capacity building, and an emphasis on expanding opportunities for women exporters and entrepreneurs championing novel sustainable business models. 

“As a Domestic Systemically Important Bank (D-SIB) with the largest and strongest engagement across multiple sectors of the economy, we recognise the essential role exporters play as essential growth drivers, supporting livelihoods and enhancing Sri Lanka’s economic sustainability. Many Sri Lankan enterprises already create products that have the capacity to capture and hold small but extremely valuable niches in international markets. Our priorities at HNB are about much more than simply expanding business transactions. A rapid increase in facilitation of exporters is a national imperative to empower new entrants and existing players to sustain and expand export growth moving forward.

“Already, we have identified and empowered several of those with the highest potential for growth and scalability to transform themselves into regional and even globally renowned value providers. By actively supporting and empowering more Sri Lankan businesses to start their export journey, we see immense potential for “Made in Sri Lanka” products manufactured at the grassroots to capture new markets across the globe, attract additional foreign investment, and rapidly bolster Sri Lanka’s economic recovery,” Pallewatte explained.  

Nurturing Sri Lanka’s next generation of exporters 

Today, HNB offers a comprehensive end-to-end service, and the most value-focused products in the trade finance business in Sri Lanka. This includes everything from complete structuring of Trade Financing facilities, issuing of Letters of Credit and Negotiation of export documents to issuing of Shipping Guarantees and the facilitation of Entrepôt trade business. 

Lending further support to the sector, HNB also signed up as strategic banking partner for the National Chamber of Exporters of Sri Lanka (NCE) for 2022/23 for the second consecutive year to establish seamless connectivity among the exporters’ community. This in turn enabled HNB to better understand common challenges of the industry and gain insightful experiences from local companies who have successfully entered global markets.  

“Access to finance for exporters has been a continuous challenge, and the situation was further aggravated with volatility in exchange rates and foreign currency scarcity which prevailed over the majority of last year. While there are alternative options for financing, they tend to be at rates that are not feasible for the likes of emerging corporates and SMEs who face global competition. That is why HNB focuses on building long-term partnerships with Emerging Corporates that have the potential to transform into export powerhouses. Instead of simply focusing on maximising revenue, we leverage the best technical expertise and tech capabilities to deliver holistic value to our export customers, that empowers them to pursue opportunities globally.” 

Pallewatte also anticipates a rapid expansion in domestic export-focused production, and with it, a sharp rise in related businesses and demand for export facilitation services. “A top priority for us is to identify and support Sri Lankan exports which can operate with minimal imported inputs, and cater to premium markets over low value-adding products for mass markets,” he asserted. 

Having recognised that the growth of emerging exporters will catapult Sri Lanka into a dominant regional force for innovative, value-added, and sustainable exports, HNB is also working to optimise opportunities for the sector through the launch of various value propositions, including ‘SME Expo Credit Scheme’ to finance start-up exporters. These powerful value propositions demonstrate HNB’s unmatched superiority in the spaces of logistics, insurance, and supply chain optimisation and digitalisation, through investments in advanced new enterprise resource planning (ERP) systems. 

Similarly, HNB is partnering with key export sectors such as Tea, Rubber, Cinnamon, Apparel, and Processed Foods, together with promotion of Coir and Coir based products, Vegetables/Fruits with a special emphasis on local value addition and the Gems and Jewellery industries, as well as service exports related to IT/BPO industries.

Empowering Sri Lankan exporters to go global in the digital age 

In keeping with HNB’s aggressive adoption of advanced technology, and its roll out of extensive digital banking solutions, Pallewatte also explained how the bank is rolling out a new Transaction Banking proposition that enables seamless operations through Local and Cross Border Payments, Statutory Payments, Cash Management Products, Connectivity Options and enhanced Security. 

In its continued efforts to provide enhanced structured solutions to customers, HNB has also successfully tied up with the Asian Development Bank to offer Supply Chain Financing solutions which will aid in facilitating enhanced balance sheet management for suppliers and buyers, and is expected to be rolled out soon, to discerning exporters.

“The trade finance industry has emerged as a key focus area for realising the efficiencies of blockchain technology. Blockchain has the potential to disrupt the trade landscape by making it easier to reduce disputes and fraud to provide delivery and payment certainty, enable transparency of trade asset movement, and facilitate the flow of trade receivables resulting in increased collaboration, automation and oversight in trade transactions. Our broader goal is to enhance efficiency of back-office operations and utilise the space it creates to further develop the ecosystem and integrate key clients, so that we can connect them to opportunities globally,” Pallewatte said. 

Paving a way to showcase Sri Lankan exports at global forums is key in creating awareness among prospective buyers and consumers. Having identified this requirement, in addition to the traditional export related initiatives stated above, HNB partnered with Cord360.com in 2021 to offer Sri Lanka’s first digital B2B platform for overseas export market opportunities. Cord360.com is an online business platform that resembles the globally powerful Alibaba platform; where it connects businesses beyond borders via the e-platform through increased network connectivity. 

The best in the Trade Finance business

Certified as ISO 9001 2015, HNB Trade is a one-stop-shop trade services provider with a fully-fledged International Trade Services arm under the bank’s Wholesale Banking Group (WBG) vertical. The Trade team is committed to deliver fast, efficient, reliable and comprehensive solutions for every stage of a client’s trade value chain, to support clients’ evolution in line with the ever-changing cross border and domestic trade requirements. 

A key ingredient in HNB’s advanced capabilities, is its team of highly experienced and qualified professionals that drive its International Trade Services department. HNB has one of the largest pool of Certified Documentary Credit Specialists amongst banks in Sri Lanka. These highly skilled individuals combine innovative technology with unmatched technical expertise in order to provide simple, user- friendly solutions even for complex transactions, risk mitigation and trade finance, encapsulating the end-to-end process of a trade transaction, leading to greater confidence amongst the bank’s trade customers. 

HNB adopts a unique model to service its clients through a three-pronged approach where customer facing, centralised assessment of credit/compliance and centralised processing are seamlessly integrated to provide an unparalleled customer experience. 

“This will eventually see the creation of a much more vibrant ecosystem of products and services all geared towards supporting Sri Lanka’s next leap in export development. Our goal is to create exponential benefits for local enterprises to become export powerhouses, and build new opportunities for diversification of Sri Lanka’s exports and export destinations,” Pallewatte stated. 

Having supported clients in international trade for decades, as a leading provider of services with a fully-fledged Trade Services arm, HNB has built global networks, local support and expert solutions to help its clients engage in trade efficiently, with a deep commitment to deliver comprehensive customisable solutions for every stage of the trade value chain. 

These powerful capabilities have also helped HNB to win global recognition for its advancements in international trade services. Most recently, this included being declared as the ‘Best Service in Trade Finance’ and ‘Market Leader in Trade Finance’ for 2023 by Euromoney Magazine, for its consistent service excellence. 

“As a bank with a pioneering legacy of partnering with local enterprises to support economic growth and development across Sri Lanka across generations, we look to the futurwe with great optimism. While times are challenging at present, we believe that HNB can play a pivotal role in linking Sri Lankan businesses to global trade opportunities. In this manner, we aim to become a beacon for growth in the domestic financial services sector, and lead the creation of an export-led sustainable business eco system that will bring an inclusive economic growth for all Sri Lankans,” Pallewatte said.