Sunday, Dec 17, 2017
Finance | Asia-Pacific | Sri Lanka

Market-Responsive Banking

“We are the technology innovators bringing new and creative solutions to the table”


2 years ago

Aravinda Perera, Managing Director of Sampath Bank
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Aravinda Perera

Managing Director of Sampath Bank

The first bank in Sri Lanka to introduce MasterCard and Visa payments, an ATM network, mobile banking and an internet-payment gateway, Sampath Bank is looking to consolidate its regional position as an industry innovator, as well as test out new markets overseas. Managing Director Aravinda Perera discusses what is now on the bank’s radar.

How are the banks the key enablers of Asia’s growing economy?

It is pivotal to understand that the region’s stock exchanges and capital markets are not as robust as what you would experience in Europe or the USA. Financing the growth through banks is much more relevant in Asia compared to stock options, rights issues, or other ways of raising capital. In this regard it would only be correct to say that the banks have been the key enablers of Asia’s economic growth, but this only applies to countries like Sri Lanka, and not Japan, Singapore or Thailand, where stock markets are very mature.

More than that, the development banking and financing of major projects through banks has a long history in Asia; they have been the backbone of some key developments, and a great example is Sri Lanka where we already had a development bank 60 years ago.

To what extent do you think the banks will continue supporting future growth?

Asia has a strong family culture, where owning majority shares is perceived as a priority. In most of the cases the owners like to keep 50% to 60% shares and find it difficult to dilute the company through IPO offerings or share issuing. The way I foresee it is that as long as these family-owned companies or conglomerates can expand through the banks, they will never contemplate raising funds through capital markets. It can be a drag on stock markets, where the banks have an advantageous position, and a stronger leverage to partake in the region’s growth. Colombo’s stock exchange has done tremendously well over the last few years, but the same principle applies to our small island. We have several large conglomerates that strongly hesitate to raise their finance through a public offering and would rather partner with a strong local bank. It is pivotal to educate and thrust a strong confidence in our stock exchange and capital markets, which will have a strong spillover effect and help these local brands expand exponentially into the international markets.

Sri Lanka has a relatively sophisticated financial sector for an economy of its size, with the current banking penetration standing at 83%, according to the 2014 Global Financial Inclusion (Findex) database. What is Sampath Bank’s role is Sri Lanka’s financial sector?

Sri Lanka may be overbanked in Colombo or major cities, but not so much in rural area. We may have 3 million accounts at Sampath Bank, but if you search deeper some of the households may have two or three accounts with us.

People who are already banking with us create and expand, especially the SMEs. They are much stronger in expansion than some of the corporations, and that’s where our business is growing at a rapid rate. So to summarize, Sampath Bank’s number one priority is to provide finance and expertise to our customers and have a retail bias. We have over 220 branches around the islands extending from the north to east. Of course lending and deposits are two major factors for our growth, but we are looking to get into the payments. We already have experienced some of the supermarkets or telecom companies trying to enter into this sector, but we believe the banks have to play a greater role. Sampath Bank has already introduced several services – such as mobile banking, payment gateways and e-commerce activities – in order to become more competitive and tap into this sector. And also we believe that we are moving towards perhaps not a cashless society, but less-cash society, where card solutions are always preferred.

Progress is slow right now, but I personally believe it will pick up a stronger momentum in the near future. So our role in Sri Lanka’s economy is to support the growth momentum, but also act fast in introducing new solutions and innovations that are needed.

Sri Lanka has been among the fastest growing economies in South Asia, with an average rate of 7.5% for the past five years. The private and both public sector believe with the right initiatives and stimulus, the economic growth can reach 10%. How can Sampath Bank play a greater role in Sri Lanka’s economy and contribute further to future growth?

In the last five years, our bank grew in profitability and its asset liabilities growth has been above the average. We have the best asset quality in the industry, with 1.7% as compared to the industry’s, which is over 4%. We have positioned ourselves towards a big expansion and have an advantage by being the best asset quality lender in the industry. We have had a very rapid expansion of branches, from 100 to 200 in three years. We are in the right place. We are ready. We have a good IT background, we have trained our people to be very reactive and aggressive regarding expansion. We are in a good position to take the country forward.

How is Sampath Bank redefining customer relations through digitalization and new technology innovation?

In 1987, we were the first bank in this country to bring card payments, both MasterCard and Visa, and to integrate an ATM network in the country. We were the first to introduce mobile banking and an internet-payment gateway. It is amazing if we look back; even some of the international world-renowned banks introduced these services after us. Sampath Bank is very proud of their innovative revolutionary history, but it is pivotal for us to continue to re-inventing and utilizing the right technology for our customers.


You have recently announced expansion into Myanmar and the right regionalization strategy for each bank of course depends on a number of factors, including its level of ambition, its strengths and capabilities, its customer base and their needs, and the evolution of the markets where it operates. Please discuss Sampath Bank’s capability for regionalization.

We firstly entered the international market in 2001 or 2002, with a leasing /stock broking institution in Bangladesh, where we initially held 20% of the shares, but now reduced to 9% very recently. So regionalization is not a new concept for us; we have recently started looking at certain countries in the region to have a strong foothold, where Myanmar came under our radar. We believe Sampath Bank has the correct technical and management capabilities that will make our presence in Myanmar a success. We plan to establish our presence in Myanmar initially to evaluate the market before making a stronger commitment. We never stop looking at other opportunities and the bank is keen to expand and grow through strong partnerships.

What is the niche that your brand can offer in comparison to other financial institutions?

We are the technology innovators bringing new and creative solutions to the table. Some of the other institutions are reluctant to go above and beyond, they would rather reintroduce what we have done already three months later.

We always go beyond the expectation whether it is for our corporate clients or a private individual. If a foreign organization is willing to establish a partnership or invest in our beautiful island, we are there to fully support them 24 hours a day; even if we may not be an expert in the field we will find the correct assistance.

You have an extraordinary and a long-standing career in banking sector. What is your personal quest for excellence for yourself and for Sri Lanka?

Our young generation is a number one priority; they should be looked after and be given the opportunity to shine and excel. Sampath Bank is supporting the youth by providing them with an opportunity to continue their education, and it is not necessary for everyone to become an engineer or a doctor or a lawyer. We want our youth to progress and prosper. Those are the people who will take our country to the next level, and put Sri Lanka back onto the map.


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