22 August 2024 02:09 pm Views - 214
NDB Bank Vice President (SME, Middle Markets, and Business Banking) Indika Ranaweera
In this interview, we sit down with Indika Ranaweera, the Vice President of SME, Middle Markets, and Business Banking at NDB, to explore the critical role of SMEs in Sri Lanka’s economic landscape and how NDB is positioning itself to support their growth. With a focus on digital transformation, strategic partnerships, and tailored financial solutions, Indika shares insights on how NDB is helping SME exporters overcome challenges and seize opportunities in the global market.
1 . How do you see digital transformation as a key driver for the growth of SMEs in today’s economy?
Digital transformation is no longer a luxury but a necessity for SMEs in today's economy. The rapid adoption of digital technologies is reshaping how businesses operate, making them more efficient, competitive, and capable of reaching broader markets. In fact, the digital payments market is 8.4 trillion US dollars, with a year-on-year CAGR of nearly 25%. This highlights an unavoidable global trend towards embracing digital solutions.
For SMEs, this transformation is not just about survival—it's an opportunity to revisit and revamp traditional business models that may no longer be sustainable. By leveraging technology, SMEs can streamline operations, improve customer experiences, and access new revenue streams. Digital transformation enables small and medium enterprises to operate on par with larger companies by enhancing their agility, reducing costs, and providing data-driven insights that lead to smarter business decisions.
In the context of Sri Lanka, where the SME sector is the backbone of the economy, embracing digital tools is critical for growth, success, and alignment with global trends. For NDB, this means thinking ahead and investing in this inevitable transformation, ensuring that our SMEs are equipped to thrive in a fast-paced, technology-driven world.
2. Could you elaborate on how NDB’s NEOSBIZ platform is specifically designed to meet the unique challenges faced by SMEs in Sri Lanka?
NDB’s NEOSBIZ platform is tailored to address the unique challenges SMEs face in Sri Lanka, particularly those related to scale, access to resources, and market reach. NEOSBIZ offers a comprehensive suite of digital banking solutions designed to simplify financial management, enhance operational efficiency, and foster growth. The platform includes advanced features such as multi-user access, allowing different user levels to initiate, recommend, and approve payments on a strictly secure basis. This ensures that financial transactions are not only efficient but also well-controlled.
One of the biggest obstacles SMEs encounter in embracing digital transformation is the security risk associated with digital transactions. To combat this, NDB Bank has invested heavily in the security infrastructure of NEOSBIZ, ensuring that the platform provides a secure environment for all users.
Additionally, NEOSBIZ supports bulk fund transfers, employee salary payments, and the ability to carry out transactions regardless of time and location, providing SMEs with the flexibility they need in today’s fast-paced business environment. The platform also includes tools for digital payments, cash flow management, invoicing, and real-time financial tracking—all of which are critical for small businesses that need to maintain tight control over their operations.
3. How important is the role of SME exporters in Sri Lanka’s economic landscape, and how is NDB supporting this segment?
SME exporters are crucial to Sri Lanka's economic landscape, playing a significant role in foreign exchange earnings and job creation. They drive economic diversification and resilience, particularly in an increasingly competitive and interconnected global market. However, while in Southeast Asia, the contribution of exports to GDP averages over 20% (as seen in countries like India, Pakistan, and Indonesia), and with the GDP contribution in Central and West Asia averaging over 30%, Sri Lanka’s export contribution to GDP is currently only 5%. This indicates substantial room for improvement, making it the responsibility of all stakeholders to support and promote SMEs in competing on the global stage and ensuring they are digitally equipped to meet these challenges.
NDB is deeply committed to supporting SME exporters by offering a range of tailored financial products and advisory services designed to help them scale their businesses and navigate global markets. Through our ‘Jayagamu Sri Lanka’ initiative, we provide financial assistance in the form of working capital and capital expenditure financing, alongside non-financial support such as market access and business development services. This comprehensive support system ensures that SME exporters have the resources, guidance, and digital readiness they need to succeed globally and contribute more significantly to the nation’s GDP.
4. What specific financial products or advisory services does NDB offer to help SME exporters scale their businesses and navigate global markets?
NDB is deeply committed to supporting SME exporters, recognising their critical role in boosting Sri Lanka’s GDP and economic resilience. Through the Bank's ‘Jayagamu Sri Lanka’ initiative, we have entered into strategic MOUs with key organisations such as the Chamber of Commerce, Export Development Board (EDB), and National Enterprise Development Authority (NEDA). This collaboration allows us to provide comprehensive support and advisory services under one roof, making it easier for SMEs to navigate the complexities of international trade.
Moreover, at the regional level, our experienced credit teams assist SME exporters with product structuring and delivery, while also connecting them with relevant authorities for specialised advisory services. We also host regional workshops that bring industry experts and successful exporters together to share insights and best practices. In addition, NDB is partnering with multinational organisations like USAID, IFC, and ADB to extend both financial and advisory support to this crucial segment.
Recognising the importance of increasing the export contribution to Sri Lanka’s GDP beyond the current 5%, we have built infrastructure within the organisation to better support this mission. This includes enhancing our transaction banking units and regional trade teams, ensuring they are equipped to help SME exporters scale their businesses and succeed in global markets.
In addition to these functions, NDB offers NEOS Corporate, a web-based application that enables clients to initiate Telegraphic Transfer (TT) requests and more. Moreover, NDB also plans to introduce new features in NEOS Corporate, allowing clients to initiate Letters of Credit (LC) requests, send LC requests, and open LCs, among other functions. This platform is designed to streamline trade operations, making it easier to manage their transactions securely and efficiently.
Beyond these initiatives, NDB offers a range of financial products tailored to SME exporters, including pre-export and post-export financing, trade finance solutions like, bank guarantees, and foreign exchange services. These tools are designed to provide essential liquidity and mitigate the risks associated with international trade. Our Exporter Facilitation initiative further supports SMEs by connecting them with export development boards, foreign market platforms, and other critical resources, ensuring they have the support needed to achieve long-term growth and success.
5. The SME Re-Energizer Loan Scheme has garnered a lot of attention. Can you explain how this initiative is helping SMEs to not just survive but thrive in the current economic climate?
As a country recovering from the challenges posed by COVID-19, the Easter attacks, and the economic crisis, SMEs are often the first to be hit during economic vulnerabilities. Recognising this, the SME Re-Energizer Loan Scheme was introduced by the government with the intention of providing timely assistance and support to help these businesses overcome difficulties swiftly. Given our close partnership with SMEs over the last four decades, NDB considers it our responsibility to be deeply involved in this initiative.
We are not only distributing the Re-Energizer credit line to all SMEs in need but also offering advisory and remedial services to ensure that these businesses do more than just survive—they revive and thrive. Our commitment extends beyond lending; we actively work to ensure that businesses can successfully recover and grow using this credit line.
The SME Re-Energizer Loan Scheme is a strategic initiative that provides SMEs with crucial financial support, allowing them to stabilise their operations, invest in growth opportunities, and adapt to changing market conditions. By offering concessionary lending rates and flexible repayment terms, the scheme significantly reduces the financial burden on SMEs, enabling them to focus on business expansion and innovation rather than merely surviving. This initiative has been particularly impactful in helping SMEs rebuild after the pandemic, positioning them for long-term success.
6. What sectors do you see benefiting the most from the SME Re-Energizer Loan, and how does NDB tailor its financial solutions to the diverse needs of these sectors?
The SME Re-Energizer Loan Scheme is designed to support a broad spectrum of sectors without restriction. NDB is committed to aiding all impacted SMEs and helping them recover through this credit line. We have established a dedicated remedial unit to assist affected businesses, and this effort has already led to the revival of numerous companies. Our support extends beyond the Re-Energizer Scheme, including our own advisory services and additional funding.
NDB customises its financial solutions to address the specific needs of each sector by offering tailored loan products, flexible terms, and specialised advisory services. This approach ensures that businesses receive targeted support to overcome challenges and seize opportunities within their industries.
7. Looking forward, what are the key trends or challenges you believe SMEs in Sri Lanka will face, and how is NDB preparing to address these?
As SMEs in Sri Lanka look ahead, they will encounter several significant trends and challenges. The rapid pace of digital transformation presents a major hurdle, as businesses must revisit and realign their models to keep pace with global trends. With globalisation driving competition, even the smallest SMEs need to think big and consider the broader picture. For instance the influence of major economies like India, the USA, and China will affect local businesses, necessitating adaptations to new global dynamics.
Sri Lanka’s slower digital adoption compared to other Southeast Asian countries underscores the need for all stakeholders to support SMEs in this transition. Access to capital, navigating regulatory changes, and keeping up with evolving consumer preferences will also be critical issues.
In response, NDB is committed to helping SMEs navigate these challenges. NDB will continue to enhance our digital banking solutions, such as NEOSBIZ, to provide SMEs with the tools needed to stay competitive. Our expanded advisory services are designed to offer comprehensive support as businesses adapt to these changes. By focussing on innovation and tailored support, NDB aims to empower SMEs to thrive in a dynamic global environment and contribute effectively to Sri Lanka’s economic development.