HNB – DEPLOYING SUSTAINABILITY ARCHITECTURE IN ITS BUSINESS DNA

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Technology may be driving firms to think innovation in a world of modern consumerism, however, regulatory requirements are on the rise as financial institutions have come under more scrutiny globally in recent years. In this scenario, transparency has become the new currency that builds trust. Creating greater transparency and accountability in the business space has enabled firms to make better-informed and more robust decisions in a complex environment where financial and non-financial challenges remain quite inter-dependent.

With an ambitious strategy in place, HNB is driving its sustainability agenda to successfully navigate the challenges ahead, with greater resilience, innovation and adaptability. Talking to the Echelon team, Chiranthi Cooray, Head of Sustainability & DGM HR/CHRO shares the bank’s strategic approach to surge ahead in this fast-paced financial world.

Profitability is key for business success. Yet, stakeholder expectations have evolved to demand more from companies. As a bank, what are those key goals beyond profitability?
A: HNB is a systemically important bank. While profit is a strong requirement, it’s not the only driver. Sustainable business performance built on a solid foundation of trust and consistent delivery is a more wide arching goal. Our purpose goes way beyond a profit motive to that of direct economic value creation – taking regulated financial services and economic empowerment to all parts of the country, especially in areas that are beyond the urban and suburban territories. It’s our key business philosophy and something we remain passionate about.

Which stakeholder demands do you think are the most challenging in the current environment?
A: All stakeholders have evolved in terms of their demands. As technology advances at a rapid pace, so do stakeholder needs, wants, desires and expectations. This is natural, and as a financial institution, it’s our responsibility to leverage opportunities to stay competitive or be a trailblazer.

In addition to technology, lifestyles are also fast changing. Today, digital banking is the trend, because it offers so much convenience to the customer. Although customers are happy to walk into any of our branches, that does not stop them from seeking the benefits of convenience banking, such as internet or mobile banking, especially with smartphones taking over our lives today. Demand will always be there, and as a business, we should anticipate it and ensure we deliver on it, which means we have to be agile and adaptable.

How does HNB adapt to millennial demands both in terms of the working environment and from a customer perspective?
A: Several years ago, we launched Yawwana Abhimana targeting rural and suburban youth, to empower them with an entrepreneurial mindset. Today, we have HNB You, the Fit App for savings and Future+ for education loans, which fulfill the needs of the younger generation. We understand that millennials are ambitious; they have competing life goals – from education to career and lifestyle – that they are driven to achieve. They are passionate about causes, from saying no to animal cruelty to stop polluting the earth. They believe and value ethical business practices and have a voice and identity of their own. So, from a customer perspective, it’s an interesting segment to be catering to, and as a bank, we are attuned to it.

If you look at it from an employer’s perspective, today, the talent pool is much larger, more capable and qualified. At the age of 21, most youth have completed their education and are armed with one graduate level qualification or more. They are quick learners and are ready to step up and take on a challenge if tasked with it. They are changing workplace dynamics, and from a banking perspective, it’s a positive influence.

Our sustainability strategy pillars include education, healthcare, community, economic empowerment and the environment

Is HNB nimble enough to optimise the opportunities in a fast-paced technology driven world?
A: You have to be nimble to stay relevant. At the same time, banking is a long-term business. So, for the sake of agility and being nimble, you can’t compromise on banking fundamentals. We do have customers who are a fourth generation HNB customer; they are the real ambassadors of the HNB brand. A sustainable value proposition is one that takes a long-term view and invests in technology to serve customers, while bearing in mind that rapid gear shifts are difficult to make. To offset this, agile strategies need to be in place to strike the right balance. As a bank, I think we are quite nimble in terms of adapting to change. We have agile teams both on the technology and IT business solution side that work closely with the business teams to capture their needs. We have made significant investments in technology to provide better customer experiences. Recently, we launched HNB Connect, our omni-channel contact centre, which has artificial intelligence, data and voice support, enabled chat and text facility. So, overall, we have proved that we have an impressive ability to adapt and embrace change despite our size and legacy. The leadership vision, and the unrelenting commitment and rigor of our staff have proven to be our strength in earning this position.

What does sustainability mean in a financial sector environment?
A: For the industry, upholding equator principles and commitment to the sustainable development goals (SDG) resonate well. For us at HNB, it provides a strong cusp between SDGs and direct economic value generated and distributed, customer satisfaction, ethics and corporate governance, regulatory compliance, brand management and reputation and of course integrated risk management. These are external factors that are high on the materiality index. On the internal side, employee development is key.

We have relentlessly worked on these areas irrespective of it being in the customer or process front, digital technologies, governance, risk or compliance aspects, to continually improve. HNB being recognised for the 10th time as the Best Retail Bank in Sri Lanka by the Asian Banker Magazine is ample testimony to our sustainable approach to business.

How does an aim to be a sustainable business impact the people working in a company, and how is HNB approaching this?
A: At HNB, sustainability is ingrained in our DNA and cascades down to the bottom of the organisation. Yet, it’s not a top down. While HNB’s Sustainability Foundation drives corporate citizenship through its strategic pillars, our branches island-wide undertake location-based CSR projects involving community and staff. The ethos of sustainability starts from the point of talent acquisition with an extensive induction programme that covers all aspects of risk, operations, credit, compliance, audit and control, which are critical from a bank’s perspective. When we post a new entrant to any one of our 250 plus customer touch points, we need to ensure that they not only have the necessary knowledge to do the job accurately, efficiently and effectively, but also live up to the ethics of the Bank, which is the foundation of sustainability.

We have a green pledge with a focus on our carbon footprint. Our sustainability strategy pillars include education, healthcare, community, economic empowerment and the environment. Rather than merely donating or reserving money for projects, we encourage employee volunteerism. We have created the mindset that more than entitled, we are privileged; that there are lesser-privileged people out there who we could help.

Do awards really matter, especially to HNB?
A: There is a general perception that firms engage in sustainability initiatives to win awards. I believe corporate Sri Lanka has evolved to a more mature level in the journey and does not necessarily focus on awards, but continues to do the good work. At HNB, the initiatives we undertake are purely because of the passion and commitment we have, and recognition is a consequence of it. Yes, it’s nice to be recognised for the effort, not only for the brand, but also for the effort and passion of our 4,348 people.

It would also be encouraging to see more of the second tier being recognised, as this would raise the bar in small and medium companies. I also believe that a detailed audit by the awarding body post the awards programme, would make the awards more meaningful and place a responsibility on the winners to aim for higher standards.

While profit is a strong requirement, sustainable business performance is built on a solid foundation of trust and consistent delivery

Beyond the pace of technological change, new capital rules and compliance demands are challenging banking. Despite these, tell us how you raise the sustainability agenda in strategic management at HNB?
A: At HNB, integrated risk management is essential and integral to sustainability. We raise the sustainability agenda by making these key strategic inputs into the sustainability roadmap of the bank. Our teams have a broad understanding that goes way beyond functional silos. Emerging compliance requirements and capital rules are being embedded into the bank’s sustainable business framework in a holistic manner, and we have cross functional teams working across the bank taking these initiatives seriously and working towards strengthening the bank’s focus on being compliant in this area. This approach has enabled sustainability to be engrained into the fabric of the organisation, which is working effectively for us.

As a financial institution, we strongly believe in sustainability of our customers, as it is the key to our own sustainability. Our stringent environmental and social risk assessment procedures enable us to identify the E&S risks to our client’s business activities and advise them to minimise these risks, persuading them to move towards international best practices and standards. Through the Sri Lanka Sustainable Banking Initiative, we share our experience and knowledge as a leader in this area for the benefit of the entire financial sector in the country.

Tell us about vision 2020?
A: Our vision 2020, apart from the financial goals, is high on customer and employee experience.We h ave it identified in our materiality assessment, as these two areas are of significant importance to us as a bank. Enhanced customer experience through unique value propositions is a critical path in our journey. On the employee front, we aim to be happy and bright. Happy and bright goes beyond mere coining of words to mean that our Hatna family has capability, courage, conviction and confidence to serve our customers. To achieve these goals, we are optimistic about the future and committed to making the right investments into digital technologies and IT infrastructure to serve customers better, as well as enhancing the capability and motivation of our team.

What are the challenges of reporting sustainability in a service and financial sector institution as large as HNB?
A: For a manufacturing company, it’s relatively easy to report on a given sustainability matrix. For a service organisation, it’s not so straightforward. However, we can’t sit back and complain that we are in services and it’s not a level playing field. So, we have taken on the challenge and started being the change we want to see. We have commenced converting our branches into solar. Currently, we have converted about 70 branches, giving back thousands of kilowatts to the national grid. We have been driving lean transformation relentlessly for the last five years. We put in place a process improvement and change management department that drives lean transformation and six-sigma, which is a manufacturing approach, to look at reducing our carbon footprint and achieving certain milestones in a sustainable manner. We have converted an absolute challenge into a good opportunity and learning experience by choosing to look at things differently and having the conviction to ‘just do it’.

How important is diversity and innovation within the financial sector and what is in the agenda to further engrain this in the bank going forward?
A: We are a diverse organisation in every realm. Our customer segments are diverse in many aspects and we pride ourselves in holding a micro finance portfolio of which 31% are women. In terms of gender diversity in our workforce, three to four years ago, the bank was at a 36% but last year we reported 40%. That’s a very credible statistic for a bank. We are equal on pay and an equal opportunity employer, be it gender, age, ethnicity, etc. Diversity is only one aspect; what is more important is inclusion. There is no point in having diversity without inclusion. We ensure that our workplace supports inclusion with sound policies that are implemented on the bedrock of the unique Hatna family culture.

We are humbled to note that we started the sustainable financial initiative in the banking industry. We pioneered a collaborative spirit and adopted self-governance principles in sustainable financing as an industry. The Sri Lanka Banks Association champions this programme and it’s adequately supported by the regulator. We have learnt from this intervention that innovation is not always about a product. Innovation can also be in terms of the mindset of the leaders.

Our heritage and size give us strong value points to embrace change and grow. It has helped us to leverage opportunities and deliver value to all our stakeholders.