“We positioned ourselves at the beginning as a niche bank”
Keshini Jayawardena, deputy general manager of Nations Trust’s retail and SME banking business discusses the banks’ focus on customer service and processing model. March 14, 2014 | ResearchNations Trust Bank is one of the newest banks in the Sri Lankan financial services industry but it is already establishing itself as a premier retail bank with a focus on customer service, pioneering 365 Day banking service, sales focused model, lean and efficient branches focused on sales & services, and a centralized processing model coupled with modern branch facilities, still a rarity in today’s Sri Lankan retail financial services market. The bank commenced business 14 years ago by acquiring the Sri Lankan branch of the Hong Kong based Overseas Trust Band (OTB). Nations Trust bank was promoted by two leading corporates in the country, the John Keells Group , one of Sri Lanka’s biggest blue chip conglomerates and the Central Finance Group , a listed Finance Company, together with the international Finance Corporation ( IFC). As a small bank with 72 branches and $1 billion (Sri Lankan Rupees 142 billion) of total assets as of end 2013, its CAGR for core deposits between 2010 and 2013 was 26% compared to average market growth of approximately 20% for core deposits. In the same period, new customer acquisitions have grown by CAGR 10% in the same period. A strong treasury and corporate banking business contributes 27% to total income, but 90% of deposits are from retail. Its total deposit share of the FI banking industry is about 2.5%. Currently, the bank is in the process of taking its proposition to a wider segment encompassing the emerging mass as well as SME segment throughout the island. It is the second largest credit card issuer (incl. issuing an American Express card), behind HSBC and one of the few local banks able to be able to do unsecured consumer financing. “We positioned ourselves at the beginning as a niche bank targeting the high end wealthy segment of the market. That required a very specialized operational approach to do affluent private banking. In the first 2 years we played between the foreign banks such as Standard Chartered Bank and HSBC and the large domestic banks, presenting ourselves as a local bank with a foreign bank flavor especially in terms of modern branch banking, product offering and a very personalized high quality relationship management to the higher end customer banking market. We were initially having a very good coverage in the western province and have been expanding island-wide since 2010, especially into the Southern, Central, Northwestern, Eastern and Northern provinces,” explains Keshini Jayawardena, deputy general manager of Nations Trust’s retail and SME banking business. “Nations Trust Bank is in the process of transforming from a niche bank for the affluent to a full service bank expanding beyond its strongholds in wealth management and credit cards of which it is the second largest issuer in the country after HSBC. The transition into a full service bank has been achieved by a combination of strategic acquisitions – for example the merger with a leasing company gave us an entry into the SME market or specific segment-targeted product and service propositions such as the development of a packaged product aimed at salaried employees. A key challenge though is to balance a strong insight into new customer segments while not losing the service proposition to our existing customer,” she adds. While it aims to venture into a full-fledged service bank it is not keen putting a priority on its mortgages business due to its funding base and competition from the largest banks. Yet, its key business goals are to increase its percentage of low cost funds. It aims to be become a customer’s primary bank thus attracting their current and savings accounts and the bulk of their transactions. In addition, it targets to have a 30% CASA ratio by 2018. To support this strategy it aims at increasing its branch network, introducing convenient alternate channels, and to develop bundled products within different segments. Competing with the largest banks in fields such as SME banking or consumer finance was a challenge but Nations Trust Bank began differentiating were it matters to customers. “In the initial period we opened our entire branch network for 356 days a year and we are the only bank today that is offering this though other banks have started following us,” Jayawardena said. “We are also perhaps the only local bank to have a focused segmented approach to our customers - identifying our High Net Worth Customers, Mass Affluent Customers, Emerging Mass, and SME customers, and offering each segment the appropriate products and services. By doing this we are also able to identify the “ Life Cycle “ of the customer and design products and bundles of products relevant to customers at different stages of their personal and business life,” she explains. By having a segmented approach the bank is able to customize to a certain extend its customer service and relationship management. For instance, in the segment of mass affluent customers it offers a differentiated service and product proposition we called “Red Carpet Banking”. Mass affluent customers are given priority in terms of preferential service and tariffs, and are handled by a Relationship officer. In addition, preferential interest rates and concessionary tariffs are offered to this segment. In terms of relationship management - special gifts are sent on their birthdays and special occasions. The customer’s individual profiles are maintained by the relationship officers and special invitations are extended for events such as dramas, musical shows sports activities such as Golf , Cricket, Rugby based on their individual interests. In addition the bank provides door step banking services to these customers where cash and cheques are accepted by an agent visiting them within an hour of notifying free of charge. Another success has been the launch of its “Nations Salary Saver Account” in 2013, a bundled product designed to attract the regular salary credit of employees and professionals with a host of added features such as rate concessions on personal, car and housing loans , fee waivers on debit and credit cards, pre-approved overdraft and leasing facilities. The contribution to total account growth is 18%. i. e 18% of the new savings accounts opened in 2013 were Nations Salary Saver Accounts. During the January to February 2014 months, it contributed to 28% of the new savings accounts opened. It also has a very strong card portfolio primarily consisting of American Express Cards. The strength is based on a strong partnership maintained by Nations Trust Bank with the American Express Franchisors where the bank acted as the sole issuer and acquirer of American Express Cards in Sri Lanka for over 10 years. It enabled the bank to establish dominance in the premium segments, their share of wallet and credit card spend which continues. The bank’s card business is looking at positioning itself as an end to end payment solutions provider, to consumer and business segments alike by expanding its bandwidth through the issuance of credit, debit and pre-paid cards. Today it stands as the 2nd largest player in the credit cards market in terms of card issuance with 200,000 plus credit cards issued. Its express goal is to become the market leader in terms of total cards in force by 2014. Nations Trust Bank is among the top banks in the consumer finance business behind HSBC. There are several different types of products ranging from personal loans, card loans to housing loans made available under the consumer finance business with a view of facilitating credit to a larger cross section of the market. Its channel strategy aims at increasing its physical footprint and build a strong digital banking proposition. Nations Trust Bank strategically expanded its branch and ATM network across the country, increasing its brand presence and visibility by 15 new branches in 2013. It is planning to open a significant number of new branches in the next 3 years. Being among the few local banks that takes a focused segmented approach to its customers, it considers its branches as sales outlets. “To do this we introduced a focused Sales Force Effectiveness programme for all branch staff, encompassing a host of sales tools as well as templated branch procedures to improve sales. In addition the bank streamlined branch processes and aligned branch size and manpower to transaction volumes thereby increasing efficiencies, reducing break-even period and cost to income ratios. We are the only local bank to have a fully centralized back office support unit, enabling us to deploy small and efficient sales oriented branches. We aim to reduce our branch CIR and increase sales FTE productivity significantly in the next four years,” she explained While it will continue its branch and ATM expansion, it will upgrade its core banking system in 2014 and re-launch its digital channels to roll out a unified experience on desk-top, tablet and smart phones. Categories: Retail Banking, Wealth Managementretail,Wealth Management, Retail Banking,Wealth Management, Keywords:Keshini Jayawardenace, Nations Trust Bank, Sri Lanka, Overseas Trust Band Keshini Jayawardenace, Nations Trust Bank, Sri Lanka, Overseas Trust Band
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