In a recent conversation with Global CEO Magazine, Mr. Bingumal Thewarathanthri, the Chief Executive Officer of Standard Chartered Sri Lanka, shares insights on “Banking Beyond Borders: Navigating Economic Growth and Stability.”
Mr Thewarathanthri delves into Standard Chartered’s pivotal role in supporting economic growth and stability within Sri Lanka. The bank collaborates closely with the central bank and local financial institutions, offering correspondent banking services to facilitate cross-border payments and trade. Notably, they’ve spearheaded initiatives like cross-border LC confirmations and guarantee provisions to sustain trade flows amidst challenges such as sovereign debt default.
Moreover, Standard Chartered embraces digitalisation to enhance banking services and promote financial inclusion. Their innovative solutions, like the S2B Next Gen platform, streamline transactions and empower businesses. Additionally, their commitment to sustainability is evident through stringent ESG standards and initiatives aimed at addressing societal challenges like climate change and inequality.
Looking ahead, Mr Thewarathanthri outlines the bank’s strategies for sustained growth, emphasising a purpose-driven approach focused on driving commerce, prosperity, and responsible banking practices. Standard Chartered aims to maintain its competitive edge in the global market while advancing its mission of fostering innovation, supporting SMEs, and driving economic empowerment both locally and beyond borders.
Q. How does your bank collaborate with the Central Bank and other financial institutions to support economic growth and stability within the country, and what initiatives have been particularly successful in driving this collaboration?
Standard Chartered is the only international bank to offer correspondent banking services to all 13 local commercial banks to enable cross-border payments and trade. We have supported all local banks with cross-border LC confirmations and guarantee requirements to sustain trade flows even post sovereign debt default. In addition, we actively participate in the domestic interbank money market to provide liquidity to the banks to support much needed credit growth. Standard Chartered also participates in the Government Treasury Bills market to support the state finance its expenditures in areas such as Health & Education and relief programmes such as ‘Aswesuma’ to sustain the livelihoods of our citizens.
Q. In an increasingly interconnected global economy, how does your bank navigate challenges and opportunities arising from international markets and cross-border transactions, and what strategies do you employ to ensure resilience and sustainability in the face of external economic factors?
As a global bank, we are aware of how financial systems can transform lives for good, but can also fuel harmful activities like terrorism, trafficking and corruption. At Standard Chartered, we have a unique opportunity to drive sustainable growth across our markets, while also having a key role to play in tackling financial crime. We have been building stronger defences through compliance and nurturing a culture where each one of us sees combating financial crime as part of our daily work. Our work doesn’t stop there. We’re teaming up with banks, governments and regulators around the world to raise the bar across the industry and devise innovative ways to stop criminals in their tracks.
Our purpose is to ‘drive commerce and prosperity through our unique diversity.’ It sets a single direction for everything the Bank does, connecting our strategy to our growth and the ambitions we have in the societies that we operate in. It is unique to us because of our history, our global footprint and our ambitions – where we have come from, where we are now, and where we want to be. No other business can make this opportunity a reality. Our strategic priorities of Network, Affluent, Mass Retail and Sustainability put our purpose into action by connecting us with the big economic and social shifts in the places we call home. They define how we engage with our customers and society by aligning our activities with these shifts and enable us to shape the forces driving growth.
Our purpose is to ‘drive commerce and prosperity through our unique diversity.’ It sets a single direction for everything the Bank does, connecting our strategy to our growth and the ambitions we have in the societies that we operate in.
The severe impacts of climate change, stark inequality and unfair aspects of globalisation impact everyone on the planet. We have taken a stand, setting long-term ambitions for our role on these issues where they matter the most. This works in unison with our strategy, stretching our thinking, our action and our leadership to accelerate our growth. Accordingly, we have defined three ‘stands’ – which reflect our plan for our long-term ambitions on societal challenges; Accelerating Zero, Lifting Participation and Resetting Globalisation.
Q. With the rapid advancement of digital technology and fintech innovations, how is your bank leveraging digitalisation and technological advancements to enhance banking services, improve financial inclusion, and contribute to economic development both locally and globally?
Standard Chartered leverages digitisation and technology advancements in several ways to enhance our service, financial inclusion, and contribution to economic growth.
In terms of digital banking, we offer seamless stable digital platforms for client convenience with our digitisation rate being approximately 98% for corporate payments. Our Straight2Bank (S2B) Next Gen platform is the Bank’s online banking solution for businesses to manage their transaction banking needs. Designed for mobility with easy navigation between devices, the new S2B Next Gen platform enables organisations to be faster and efficient, while helping to make real-time, data-driven decisions.
In terms of our ability to offer tailored innovative digital payment solutions for unique client needs, we implemented an interbank instant payment Application Programming Interface (API) for PickMe, with a seamless payment solution to streamline collections. The solution consists of sending notifications on receivables 24×7 via API connectivity directly to the back-end system of PickMe. The fully digitised service also allows creating virtual accounts for their corporate accounts through our online banking channel, S2B. The solution offered by Standard Chartered increases the efficiency on receivable reconciliations with zero dependency on human intervention. Prior to this, we also implemented the country’s first ever interbank instant payment API connectivity solution for PickMe driver partner payments.
Another key milestone achievement in our technological transformation journey was the implementation of ‘Project Atlas’ – a modernised core banking application in Cloud. The Atlas Project harmonised various versions of core banking across markets into one single version, which standardised interfaces to reduce the overall application development, support and maintenance cost for the Bank. Being the first bank in Sri Lanka to shift its core banking system to cloud computing, the modern technology and integration landscape makes the application web browser agnostic, database agnostic and compatible with the latest emerging technology services adopting Microservices and API connectivity.
Banking & finance have an important role to play in society in facilitating world trade, which is more important now than ever, but supply chains are dislocated, and SMEs are individually suffering from a lack of access.
Banking & finance have an important role to play in society in facilitating world trade, which is more important now than ever, but supply chains are dislocated, and SMEs are individually suffering from a lack of access. On a global scale, with a focus of inventing disruptive technologies and business models, our SC Ventures business unit creates a platform and a catalyst for Standard Chartered with an aim to rewire DNA in the banking industry by promoting innovation, investing in disruptive financial technology, and exploring alternative business models. This unit brings expertise and perspectives from the world’s most dynamic markets to take concepts to new business models at scale. SC Ventures has a distinct approach to venture building and corporate structuring, which has resulted in 30+ new & nimble ventures that are backed by a regulated financial institution.
Q. What strategies does your bank employ for provisioning Stage III non-performing loans, and how does this contribute to maintaining financial stability and regulatory compliance?
Our credit appetite is selective while the through-the-door policies are stringent. Therefore, from a retail as well as from a wholesale lending perspective, we have onboarded clients with good credit profiles throughout the years. Both these portfolios are constantly monitored to ensure we proactively identify clients with deteriorating credit profiles. This has enabled us to navigate the past few years of stress triggered back-to-back due to the Easter attacks, COVID-19 disruptions and post sovereign default resulting in weak operating conditions. The proactive strategies and policies we have been deploying over the years have enabled us to establish better-than-industry NPL levels. As a result, we haven’t seen any clients being downgraded to Stage 3 due to weak operating conditions over the last two years. Therefore, our strategy has been to ensure we onboarded the right clients with good credit profiles which are in line with our credit appetite while we continuously monitor to take timely action on the portfolio to minimise any downgrades to Stage 3. This has worked well for us over the years.
Q. Sustainability and environmental, social, and governance (ESG) considerations are becoming increasingly important in the banking sector. How does your bank integrate sustainability principles into its operations, investment decisions, and corporate strategy to promote long-term economic resilience and responsible banking practices?
Our approach to sustainability is framed around a philosophy which sets out how we integrate it into our organisational decision-making, via a set of Position Statements which outline our environmental and social standards, and a list of Prohibited Activities that we will refrain from financing.
With more than 85% of our profits derived from Asia, Africa and the Middle East, our markets represent unique challenges, with rapid urbanisation, vulnerability to climate change, and significant social and economic disruption brought by the COVID-19 pandemic. We believe finance plays a role in addressing these challenges. It also plays a role in taking advantage of the opportunities; to transition to low carbon technology and accelerate inclusion through digital solutions. It can also enable individuals to build a positive future for themselves and their families, businesses to thrive and grow, and governments to deliver economic prosperity for the wider community.
We also set, and regularly review, Environmental & Social (E&S) standards for clients via a series of public Position Statements. We use these Position Statements to assess whether to provide financial services to clients operating in sensitive business sectors. In addition, we have two cross-cutting Position Statements covering Climate Change and Human Rights, and a further document which captures Prohibited Activities.
Q. As a leader in the banking industry, what role do you see your bank playing in driving innovation, fostering entrepreneurship, and supporting Small and Medium-sized Enterprises (SMEs) to stimulate economic growth and create employment opportunities within the country and beyond borders?
We as a Bank have understood that we cannot build everything on our own. Therefore, we have set up a separate entity for innovation named SC Ventures comprising accelerated labs and incubators. Through various Bank-wide initiatives, teams are encouraged to come up with ideas, explore and implement. We have reached out to Fintechs and start-ups to make sure we understand what they do by onboarding and working with them. SC Ventures has also acquired start-ups by investing as an equity holder. We aim at transforming Standard Chartered as a Tech company offering banking as a service in time to come.
Our unique footprint across the world’s most dynamic markets gives us a strategic advantage and underpins our confidence that we can continue to grow even in a less supportive interest rate environment.
As a banker operating in emerging markets, Standard Chartered plays a key role in building economies. Most of the markets the Bank operates in are middle or low-income countries.
These markets have significant challenges in access to credit and banking in terms of capital and debt equity funding. Through our stand ‘lifting participation’, we work with communities, especially women who need capital and expertise to become entrepreneurs. The Bank is committed towards empowering such small-scale entrepreneurs and SMEs. By transitioning smaller industries into the global supply chain, Standard Chartered plays a key role in the disruption of the global supply chain. We believe money can be a force for good.
Q. Over the last few years, what key initiatives has your bank implemented to enhance its performance and competitiveness in the global market? Looking ahead, what are your expectations for your bank’s performance and growth in the coming years, particularly in the context of expanding operations beyond borders?
We produced strong results in 2023, demonstrating the value of our franchise and delivering our target to push past the 10 per cent Return on Tangible Equity (RoTE) milestone. Furthermore, we have the right strategy, business model and intent to build on this momentum. We have set out clear actions to deliver sustainably higher returns, with RoTE increasing steadily from 10 per cent, targeting 12 per cent in 2026, and to progress thereafter. Our strategy has been designed to deliver our purpose: to drive commerce and prosperity through our unique diversity. We set out four strategic priorities in early 2021: continue to grow our Network and Affluent client businesses, return to growth in Mass Retail and advance on all fronts of our Sustainability agenda. The strong execution of various actions under these priorities over the last two years, where we have either achieved our targets ahead of plan or they are well on-track, has enabled us to reach the RoTE target in 2023.
Our unique footprint across the world’s most dynamic markets gives us a strategic advantage and underpins our confidence that we can continue to grow even in a less supportive interest rate environment. Our objective is to ensure that income growth translates into structurally higher profitability, striking a balance between maintaining the diversity that our clients value, while taking out unnecessary complexity that slows us and drags returns. We are also taking action to transform the way we operate, addressing structural inefficiencies and complexity whilst protecting income. Starting this year, we will run a bank-wide programme called ‘Fit for Growth’, to accelerate our previous efforts to simplify, standardise and digitise our business. We will fundamentally improve our productivity, client and employee experience and create capacity to reinvest in incremental growth initiatives. Continuing to deliver strong income growth, combined with improving operational leverage and maintaining our responsible approach to risk and capital, means we expect to achieve our RoTE target by 2026 and to progress thereafter.
