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Thursday July 18th, 2024

Jonathan Alles: building a future-ready financial services conglomerate on HNB’s 133-year legacy

Jonathan Alles Chief Executive and Managing Director at Hatton National Bank

In July 2021, Jonathan Alles will complete eight years at the helm of one of Sri Lanka’s oldest and largest private banking groups, Hatton National Bank. He is responsible for the bank’s 133-year legacy but also reshaping it for the future. Here, he reflects on that journey and his vision for the bank from transformative digitalisation to empowering employees, elevating SMEs into corporations and being a catalyst for economic growth.

Hatton National Bank is one of the country’s oldest banks, established in 1888 to support the then predominantly plantation-led economy. How has the bank since evolved, and how will you define the bank’s purpose in today’s context?

From its humble beginnings in the hill capital, HNB has grown to become Sri Lanka’s most diversified financial services conglomerate and is recognized among the Top 1,000 banks in the world by the prestigious Banker magazine.

We have a thriving presence in all spheres of the market covering SME, retail banking, corporate banking and micro financing and we are the most diversified financial services conglomerate in the country through our presence in life and general insurance, investment banking including corporate finance, primary dealership, stock broking, asset management as well as venture capital, and our foray into the NBFI segment with the acquisition of HNB Finance.

As a responsible corporate citizen, and a systemically important bank with a wide coverage across Sri Lanka, we take pride in being an enabler of growth and an active supporter of financial inclusion. Throughout the bank’s 133 years, this has been the standard that we have set for ourselves.

How are you reimagining HNB for the future and differentiating the bank from the rest of the industry?

HNB has always had an eye on the future. We launched an ambitious transformation journey encompassing people, processes, and systems with the ultimate objective of ensuring that we are future ready in every aspect. Today, many of those initiatives, especially in the digital space have proved to be extremely timely and relevant, validating the insight we have on the future.

As we continue our transformation journey, we will not waiver from our commitment to our country and the society. For decades we have supported SMEs and the grass roots, developed lasting relationships, and witnessed hundreds of young and small entrepreneurs transforming their businesses into significant corporations. This is our true strength, belief, passion and intent, and we will continue to partner the progress of our nation and its people.

What is the next big step for the bank, and where do you want to see the bank five years from now?

Five years from now we expect to see the bank transformed to be more digital with automated processes. Migration to digital channels from brick and mortar would be high with the teen and youth adoption levels peaking. Our staff too would have advanced to provide first class relationship management and advisory services and our client experience and services will be of the highest standard to cater to the evolving needs of customers.

Greater acceptance of digital banking will drive rapid links within the grassroots of the country and this in turn will enable an unprecedented level of financial inclusion, leading to a rejuvenation of rural economies.

If the planned developments in the country take place, and projects such as the Ports City, industrial parks, economic zones gather momentum, we expect significant opportunities for the group and especially for investment banking. With insurance penetration levels being low, the sector is expected to flourish as the country progresses. Our goal is to ensure that we become the preferred solution provider in each of these spaces. From such a position of strength, we believe that we can also play a more active role in the region.

Technology is transforming banking everywhere. How will banking be different five years from now in Sri Lanka, and how can HNB be the driver of change?

We moved into a new world of banking in 2014, intensifying our focus on offering choice and convenience to our customers through a range of digital channels in addition to our extensive brick and mortar presence. The mass deployment of cash deposit machines, cash recyclers, bill payment kiosks, self-servicing machines – not just in urban areas but all across the island, as well as the introduction of MOMO – the mobile POS machines, internet and mobile banking, internet payment gateways and digital payment app-SOLO, have enabled the transition into digital channels and proven to be extremely timely in today’s context.

Currently we are in the process of implementing a digital layer and our enhanced digital banking app has been one great outcome. The digital layer will also enable HNB to collaborate with fintechs and offer a range of solutions to our customers.

In addition to the digitalization of front, mid and back office, the use of Robotic Process Automation (RPA), Artificial Intelligence (AI) and data analytics will also drive the future of the financial services sector. HNB will play a catalytic role in driving change within the industry.

Our goal is to ensure that we become the preferred solution provider in each of these spaces. From such a position of strength, we believe that we can also play a more active role in the region

This July 2021, you will have completed eight years as Chief Executive at HNB. Can you share your most rewarding experience and the biggest challenge you had to overcome during that time?

What has been most rewarding are the relationships that I have built with my team and the challenges we were able to overcome together.

The management team that took over eight years ago was relatively young and had been reduced from 28 to 13 with several experienced corporate management members retiring in the preceding two years. Our significant exposure of over 15% in pawning at the time impacted our business severely due to the gold debacle and the suboptimal structures, processes and policies challenged this young team. As such, it was critical to move from an elitist team to a larger team fully involved in the conceptualization, planning and execution of the bank’s vision, strategy and objectives. We created a top 100 leadership team as the first initiative and backed it with succession planning and structured leadership development programmes, which has proved to be very successful.

Today, it gives me great pleasure to see how the bank has progressed in terms of its systems, processes, risk management and governance and to see a team that is committed, engaged, energized, humble, ready to serve rather than be served and looking to the future with expectation. Our journey would not have been possible without the unwavering loyalty and dedication of the entire team, for which I’m eternally grateful.

Leaders need to keep an eye on the future while managing everyday challenges. How do you balance these competing demands as a CEO?

This is not an easy task, but it is extremely important to ensure that your business develops in a sustainable manner. We set about achieving this goal by building our organizational structure around clearly defined objectives and establishing core teams covering sales, service, credit, operations and support. This enabled them to operate ‘run the bank’ and ‘change the bank’ verticals with minimal disruption to each other.

Teams are in place to assure that the bank is resilient to risks; systems and processes are stable, robust and compliant so that we are able to run the business as usual. On the other hand, we have ‘think tanks’ established to ensure change as a constant for the bank and cross functional teams set up to drive transformation across the bank.

What is the one leadership lesson you learned the hard way? Please explain.

Sri Lankan culture is unique, and even in this small island, people can be so diverse. Driving change in an organization in such a country is always challenging. In a 133 year old organization with its own legacy, culture and subcultures and nearly 5,000 people from around the country, representing baby boomers, generation x, y and z, the task of driving change becomes even more complex.

As such, a major part of the transformation was to align the team. Transparency, communication, engagement and building trust enabled us to break through and come together as one team, one bank, one HNB, to be where we are today. This has undoubtedly been an extremely rewarding experience.

The solidarity, commitment and utmost dedication demonstrated by the Hatna family during the pandemic, working tirelessly to serve and support customers in need, notwithstanding apparent health risks to themselves, is ample testimony of the transformation and gives great confidence that this Hatna family will stand together to weather any storm that comes its way.

What is the legacy you want to build for the bank, and yourself?

For over a century, HNB has supported generations of Sri Lankans to progress in their lives and livelihoods, be it SME, Microfinance or as individuals. We have always stood by our valued customers providing necessary assistance to support them during challenging times and enabled their growth aspirations. We have been in the forefront in driving financial inclusion and financial literacy to support the underprivileged. Our foray into digital channels have enabled our customers to carry out their transactions from anywhere anytime.

The strong bedrock of sustainability built on a robust governance and risk management framework powers the bank to be transformative while continuing to be a true partner in progress to Sri Lankans in every part of the country. This legacy ensures that HNB would remain inclusive, sustainable and future ready in the years ahead.

For over a century, HNB has supported generations of Sri Lankans to progress in their lives and livelihoods, be it SME, microfinance or as individuals