Competing with a diverse range of players in Sri Lanka’s non-banking financial sector, HNB Finance positions itself as a fiscally sustainable brand with socially progressive ideals. Where others may seek market disruption, HNB Finance entrusts its longevity to careful decision making and a customer-centric approach, strategies that have brought the firm steady gains in recent years. This is reflected in the firm’s shift from unsecured to secured lending, highlighting its risk-aware outlook.
HNB Finance is an affiliate of Hatton National Bank, and it uses this ongoing partnership and brand recognition to deliver an independent yet comparable service to its customers. Customers also benefit from access to the parent bank’s infrastructure, such as its ATM network and digital ecosystem.
Alongside financial growth, HNB Finance prioritises ESG principles across its operations. The firm has taken steps to measure its carbon footprint, develop green lending products, and invest in reforestation projects, signalling a commitment to sustainability. Similarly, its financial inclusion efforts focus on underserved communities, especially women entrepreneurs, through targeted microfinance schemes and financial literacy initiatives.
According to Chaminda Prabhath, Managing Director & Chief Executive of HNB Finance, the company’s strategic direction, grounded in governance, financial inclusion, and digital innovation, positions it for long-term growth and impact. Further, he believes that its present strategy of laying a foundation through cautious expansion will help HNB Finance remain resilient in the face of economic shocks.
How does HNB Finance distinguish its brand in a crowded non-bank financial services market, where scale and legacy do not always translate to trust?
Whether we’re speaking of a financial institution or a bank, there is often little practical difference to a customer, especially since many offer similar products. In fact, a new product can sometimes be copied, personalised to the brand, and be made available to customers in a matter of days. Therein lies the challenge in positioning the brand.
When we launched with a focus on microfinance, we knew our service-oriented approach was a winning strategy. We developed close relationships with our customers; we discussed their needs, checked how their businesses were doing, collected savings, and so on. When a customer needed help, we stepped in to offer support and guidance.
We continued this practice of building relationships as we expanded our offerings. Along with our consistently high standard of service and our core values of integrity, professionalism, respect, and more, this allows us to bring a human touch to the framework our customers rely on. This is how HNB Finance sets itself apart.
What has been the most significant challenge in repositioning HNB Finance as a standalone brand, separate from its parent bank’s identity?
HNB is a brand with a legacy spanning over 135 years, and its status as a household name in Sri Lanka is a strong advantage for us. Originally, we positioned ourselves as a microfinance company known as Prime Grameen Finance, but our evolution brought us to rebrand to HNB Finance.
We serve different segments, although there is some overlap in certain areas, such as fixed deposits. We focus on providing services and products that cater to a variety of customer needs and targeted segments, which sets HNB Finance apart from Hatton National Bank.
As a finance company, we are governed by different priorities and regulations. While we leverage their expertise and brand association where relevant, we primarily operate as an independent entity.
How are customer perceptions of HNB Finance changing as the company expands its footprint and broadens its financial product offerings?
Customers’ perceptions are changing positively. Recently, LMD conducted a survey, and we were ranked among the top three most loved leasing brands. We were previously not recognised in that sector because we didn’t offer leasing, but this changed after we expanded our product scope.
Along with our position in Sri Lanka’s 100 Most Valuable Brands, we have also been placed among the top brands in the finance sector for Customer Excellence. Our campaigns are oriented around our customers, and our industry recognition reflects this.
What internal investments in technology, human capital, or process transformation are you making to support the brand’s promise of accessibility and reliability?
We’ve made several key investments. Recently, we introduced internet banking, which is up and running. We’ve also implemented a loan origination system that minimises manual intervention, improving service speed and reducing turnaround time. We’re also investing in our employees, upskilling them and training them to provide excellent customer service.
Additionally, we’re upgrading to a new core-banking system that will be highly digitalised, combining AI, machine learning, and process automation to raise our standard of customer service.
To what extent is your growth strategy dependent on expanding physical reach versus deepening engagement within existing customer cycles?
While we continue to expand our physical presence, digitalisation remains a key part of our strategy. Although we currently rely on our branch network, we are working to make our services more accessible through digital platforms. Our new core banking system will support our digital expansion and enable us to offer a wider range of services, enhancing convenience for our customers.
However, this goal will need to match the demands of our customer base. Many will be happy to make use of mobile services, but there will likely be a niche that prefers physical locations. They may feel such locations are more reliable, more secure, or perhaps more comfortable, but the important aspect for HNB Finance is that these locations ultimately serve the customer. We will continue to maintain a physical presence for customer support.
How does the brand manage the trade-off between responsible lending and aggressive loan book growth, especially among financially vulnerable populations?
Responsible lending is non-negotiable for us. We have a structured process in place with a credit evaluation team that is separate from the business operations. Every loan is approved by this independent team, and we’ve set up safeguards to ensure we lend responsibly. While we take an assertive approach to lending by leveraging our brand’s reach and infrastructure, we do so with prudent caution. We are able to control the process because business and credit evaluation are two independent verticals.
In the context of rising digital penetration, how is HNB Finance adapting its branding and customer interface strategies to remain competitive and relevant?
We have already digitalised key services, including internet and mobile banking, and are now preparing to launch a fully integrated core banking system. This will enable customers to complete transactions such as opening savings accounts and fixed deposits without visiting a branch. Though still in the early stages, we believe these enhancements will soon give us a strong competitive edge.
Our website, a primary touchpoint for customers, has earned multiple local and international awards. As we expand our digital offerings, we remain committed to delivering an award-winning online experience.
What are the long-term brand risks in the microfinance and SME lending segments, and how is the company preparing to address issues of over-indebtedness, trust, and transparency?
Microfinance is a critical segment, but the market has become more challenging. There are a lot of unregulated companies in the space that offer loans without running the proper credit assessments, and this tends to leave customers in excessive debt. HNB Finance decided against entering this arena rashly, instead choosing to proceed as carefully as possible. This protects the firm and leaves potential options open for the communities it seeks to serve.
Our approach is to work with customers to deliver the precise service they need. This ensures their business goals are supported without them running the risk of undue financial strain. We’re also working on financial literacy and sustainability programmes to help customers better manage their finances.
One reason for our caution is the fact that loan defaults can occur more frequently, due in part to a lack of financial literacy. Many customers in this segment struggle with cash flow management, especially if they borrow for personal reasons rather than business purposes, and this negatively affects their ability to repay loans. When faced with this situation, they default, and the presence of unregulated providers makes it difficult to check their borrowing history as none has been properly recorded.
Doing our part to combat this, we actively conduct financial literacy programmes and workshops across the country, educating customers on cash flow management and ethical, sustainable business practices. We conduct two programmes a month under the “Financial Literacy for Development” banner, reaching about 100,000 customers. By enhancing their financial knowledge, we believe we can help them make better decisions and improve their business and personal financial management.
Further information about the 100 Most Valuable Brands in Sri Lanka:
Sri Lanka’s Top 100 Most Valuable Brands
Introducing Brand Finance and Sri Lanka’s Most Valuable Brands
Brand Valuation Methodology: Identifying Sri Lanka’s Top 100 Brands