In the dynamic landscape of Sri Lanka’s banking sector, Union Bank emerges as a transformative force, spearheading innovation and customer-centric strategies in the era of digitalization. Incoming Chief Executive Dilshan Rodrigo explains how the bank is carving a distinct path among its peers, driven by a commitment to growth and enhanced service delivery. Positioned to leverage robust capital reserves and an expansive branch network, Union Bank aims not only to strengthen its market presence but also to redefine banking experiences through advanced digital solutions.
How would you describe the state of the economy, and how does one approach the balance sheet responsibilities you have in this climate?
Sri Lanka’s economy faced significant challenges from 2019 to 2022, requiring extensive rebuilding across all sectors. Banks played a crucial role with the support of the regulator in business revival efforts. Under our previous main shareholder TPG, Union Bank experienced rapid growth in the first five years, becoming one of the fastest-growing banks in Sri Lanka. However, the unfortunate country issues and the exit plans of the major shareholder experienced in the next five years led to a cautious approach to lending which impacted balance sheet growth.
Union Bank will refocus efforts to drive Retail and SME business by leveraging on the 61 branches spread across the country. We have ambitious balance sheet growth targets over the short to medium term to establish ourselves as a mainstream bank in Sri Lanka. The economy is once again on a sustainable path over the last two years. The recent agreement reached on ISB negotiations is also a positive factor, now what remains is the uncertainty over elections. We need to ensure we learn from the recent past and strengthen the production economy and drive value-added exports of goods and services. Attracting Foreign Direct Investment is a key imperative in the next phase of Sri Lanka’s growth journey to create necessary employment for youth, an entrepreneurial culture and an environment for businesses to thrive. All this will help reverse the massive brain drain we have been experiencing in the recent past, a hugely important factor for the country!
What advantages accrue from being a bank with the highest capital ratios in the country? What are your key focus areas?
Union Bank is exceptionally well-capitalized. Clearly, there is a need to deploy capital effectively to support our growth ambitions. Most Sri Lankan businesses have successfully weathered unimaginable challenges in the recent past and have refocused their efforts to sell their products and services online whilst improving internal efficiencies, value addition and exploring overseas markets. We are keen to become a catalyst for entrepreneurs in this journey with highly personalized services and digital solutions. We are committed to overhauling our technology and transforming the way we work to support our customers’ increasingly digital lifestyles. We need to attract young talent, whilst continuing to invest in staff capacity-building efforts.
What are your strategies to make full use of this opportunity for growth? How does this align with CG Corp your main shareholder’s vision?
We’re focusing on targeted growth rather than widespread expansion. In retail, you will infer from our recent branding that we are targeting the mass affluent segment through digital channels and SMEs in key sectors like production, exports, health, tourism, and technology which are crucial for the country’s economy. CG Capital Partners Global Pte Ltd, an affiliate company of CG Corp Global Group led by Nepalese billionaire Dr. Binod Chaudhary, is the main shareholder of Union Bank. He is no stranger to Sri Lanka with numerous investments in leading companies in Sri Lanka, although this is his first foray into commercial banking in Sri Lanka. His son Nirvana Chaudhary as Chairman of the board is truly passionate about digital transformation and shares his extensive experience from Nabil Bank’s (where they have a significant ownership) own transformative journey.
His vision, which we all share, is for Union Bank to become one of the top five banks in Sri Lanka over the next three to five years through organic and inorganic growth. We plan to collaborate closely with Nabil Bank, sharing best practices, particularly in the digital area. While a cohesive strategy is in place to build the Union Bank brand, one major initiative is the launching of the Union Bank School of Social Entrepreneurship (UBSSE) a school for sustainable entrepreneurship partnering with local universities. This project, along with efforts to help local businesses expand overseas, underscores our commitment to national economic development.
What’s the value proposition of moving towards digitalization?
The shift towards digitalization offers significant benefits for financial institutions and customers. Despite claims of digital focus, many Sri Lankan banks still rely heavily on traditional methods. Digitalization speeds up customer interfacing processes, such as ensuring a personal loan request to disbursement from weeks to minutes, whilst ensuring all of this happens online without filling out forms or having to visit a bank. Driving digital across the back office means operational efficiencies, cost savings, and better allocation of human resources.
As a relatively smaller bank in Sri Lanka Union Bank has an advantage to lead digitalization efforts across all segments of Corporate Banking, SME and Retail whilst improving efficiencies across the board.
What’s the customer experience with Union Bank going to be, with the advancements in the digital aspect of the bank in the future?
Upon joining Union Bank, I observed the efforts made to develop a hub-and-spoke model inspired by TPG over the last 10 years, where branches handle marketing and customer service whilst centralized units and support functions at the centre manage back-office operations. Our focus is now on refining this model to truly delight our customers. Improving digital adoption requires that we learn from the likes of Apple, Amazon and Microsoft to provide a truly personalized service our customers can trust.
Achieving these goals requires substantial investment in technology leveraging group capabilities and specialist support. In Sri Lanka’s environment, ripe for financial sector consolidation, agile and technologically advanced banks will have an advantage over larger, less adaptable institutions. The regulator plays a crucial role in facilitating this evolution, there is a lot to learn from our neighbour India which has come a long way through its demonetization efforts, QR payments, improved financial inclusion and a larger formal economy through Digital ID (Aadhar), AI among other initiatives.