Uncovering the role of culture and mindset in driving vibrant digital innovation at HNB

Orchestrating a powerful digital transformation is a challenge for any legacy organisation. For an institution like HNB, which is now 135 years old, the journey into digitalisation has certainly had its ups and downs, but after nearly a decade of consistent effort, the bank is starting to see results across the board, making it uniquely positioned to help revive and reshape the Sri Lankan economy for decades to come. 

The COVID pandemic served as something of a crash course in digital banking, as reflected by an increase in the usage of HNB’s digital banking channels. Over the past year alone, more than 50% of fixed deposits at HNB were opened digitally on the HNB digital banking app, while the total volume and value of digital transactions on the bank’s banking (HNB Digital Banking App) and payment App/Wallet (Solo) has grown exponentially, while the first banking and digital payment experiences of the majority of HNB’s youngest customers have happened without ever having to set foot in a bank branch.

“Across the bank we are seeing digitalisation take root in powerful ways. This is possible because there is much focus in building digital capability which makes it easier to drive digital adoption both among staff and customers at HNB. Instead of the traditional experience that most of our customers have had for generations – coming to a branch to carry out the routine banking transactions, today all of this can happen on a digital platform mostly through a customer facing app on the customer’s mobile phone, thus giving our team members at branches more time to educate customers of more suitable banking products to fulfil their banking needs when these customers visit the branch. This shift is emblematic of the larger changes taking place at HNB. Our focus is to prepare ourselves for the kind of world that this next generation of customers will grow into,” HNB Assistant General Manager – Digital Business Chammika Weerasinghe noted.  

His intuition is backed by the recent findings of the Boston Consulting Group which predicts that growing demand for digital is likely to be ‘sticky’ as customers become familiar and keep engaging at 4x the frequency on mobile platforms than physical branches, and 70% of Sri Lankans reporting being “more comfortable” with Internet and Mobile banking. This meant customers were engaging multiple times a week for shorter period of time digitally as opposed to once or twice a month in person1. 

This increasing affinity that Sri Lankans have for digital banking is no accident, but rather the result of an extended, multi-pronged effort to expand and optimise Sri Lanka’s digital banking ecosystem. Most visible over the past two years was HNB’s promotion of the Central Bank of Sri Lanka’s (CBSL) Lanka QR standard, with a special emphasis on grassroots enterprises. 

Digitally linking merchants to markets 

Leveraging the largest private sector banking network of MSMEs (Micro, Small and Medium Enterprises), HNB is focusing on building its QR-capable merchant network across the country.

“At scale, this will enable everyone from a small road-side merchant to a supermarket, hotel, or even an education institute or a large retail business to accept digital payments quickly and reliably, at a low cost. With the proper logistical infrastructure in place, and the right product or service, this means that almost anyone in Sri Lanka could find customers anywhere else in the island and be able to transact with them instantly without the use of physical cash. Our challenge as a bank, and as Sri Lankans, is to understand what is possible in such an environment and keep asking the question what more is possible, and rapidly adapt these new capabilities to build convenience to the merchant and give them access to more market opportunity while giving the customer a wide choice of products and services being offered on a digital platform with easy digital payment options connecting to their cards, savings or current accounts,” Weerasinghe observed. 

Crucially, the establishment of a digital record of transactions enabled by cashless payments, together with concessionary access provided by HNB for MSMEs to gain access to additional Enterprise Resource Planning (ERP) systems and digital dashboards to measure the performance of their business can also serve as proof of their business’ performance and viability. This in turn will enable successful enterprises to gain access to collateral-free loans, and other financial and advisory support from HNB, enabling further growth opportunities. 

Meanwhile, the bank’s position as one of Sri Lanka’s largest private sector retail bank, and one of the strongest in youth savings means that HNB’s ongoing pivot into digital banking can resonate across the sectors most capable of driving a lasting change. 

A culture and mindset that embraces digital 

Today, whether it’s something as simple as checking your bank balance, paying utility bills, and transferring funds or even opening a savings account or setting up a fixed deposit, every service offered by the bank has to be mirrored in the digital space. 

While this may seem like a deceptively simple set of features, the transformations that had to take place – both in terms of physical infrastructure, and in terms of the skills and mindset of the HNB team – were complex and challenging. Significant investments were made to ensure a consistent and high quality level of service, while cutting down on time taken to process documentation. 

According to HNB Head of Digital Services Shankar Dharmaratne, this is just the beginning, and more than the technology, it has been people and a concerted effort to redefine HNB’s own internal digital culture that has been at the heart of the organisation’s continuing evolution into Sri Lanka’s most future-ready bank. 

“HNB was very early to the digitalisation game, and while the temptation was certainly there to simply bolt-on a few simple pre-made digital interfaces, we very quickly understood that if we didn’t tailor-make our strategies from the ground up, based on local market conditions and preferences, and carefully manage the shift in the skills and attitudes of our people, and the culture of our organisation, an aggressive outward push on technology would only have given the appearance of digitalisation, without any of the underlying transformations necessary to truly deliver on that promise,” he said.

“Multiple initiatives were taken to familiarise our own team with new digital capabilities, from focused training and awareness building programmes to simple but powerful measures like encouraging QR-code payments at the staff canteens. This empowered the entire HNB team to collaborate and share their first-hand experiences creating additional feedback and optimisation pathways. Meanwhile, a conscious effort has been made to recruit young and promising talent – particularly those with an affinity for tech – in order to augment all of our teams, and inject fresh perspectives and create a mindset and culture that embraces digital banking across the board.” 

Parallel to these efforts, the bank invested extensively in centralisation of administrative and back-end processes and documentation, so that as the bank’s staff became more digitally savvy, they would also have more time to focus on building relationships, advisory and problem solving, as the most mundane tasks were automated. 

This resulted in drastic reductions in the time taken to process customer applications and deliver services to customers. Applied at scale, Dharmaratne believes that these technologies have the potential to rapidly accelerate the speed, and optimise the cost of doing business in Sri Lanka. 

“At its most fundamental, a pivot to digital banking is about optimising cost and saving time for all parties. For example, even the act of creating, maintaining, transporting and keeping secure a supply of hard currency costs money and time in terms of printing and minting, storage, and security. With a shift into digital transactions, these costs are saved. In India it is estimated that the shift to digital currencies will create savings of 15-17% on the cost of printing hard currency2.”

He noted that the pandemic and the ongoing economic crisis also showed the value of digital transactions in keeping the economy moving in an environment where face-to-face transactions became more difficult. “With fuel being either unavailable, or painfully-expensive, every trip that you don’t have to make to a branch, or ATM is time and money saved for our customers, which they can channel into other expenses, which also benefits the economy as a whole,” he stated. 

Factoring in an ever-increasing rate of change of technology, he added that HNB was also working towards a comprehensive digital roadmap with multiple clearly defined and agreed upon goals to further enhance the bank’s physical and digital touchpoints. These innovations will focus on key areas such as strengthening and streamlining digital Know Your Customer (KYC) processes, to the introduction of Tablet Banking – empowering staff with devices so that even their physical interactions benefit from digital augmentation.  

Similarly, the bank is actively seeking partnerships with emerging fintech companies in order to create new opportunities for innovation and collaboration towards addressing real customer pain points, and generating further opportunities for growth. 

Through the combined impact of this continuing evolution, Dharmaratne stated that the bank aims to continuously refine user experiences across physical and digital touchpoints while working in support of CBSL’s Digital Roadmap, and maintaining HNB’s position as Sri Lanka’s best digital bank. 

Footnotes:

1The rise of digital banking in Sri Lanka: Perspectives by BCG

2Digital Rupee to save costs of printing, distributing and storing cash