NDB Bank has emerged as a trailblazer, rapidly growing its digital footprint in the recent past and capturing the digital banking landscape faster than any local bank. Identifying the bank’s excellence in the digital arena, NDB Bank was crowned with the Most Innovative Digital Transformation – Sri Lanka 2021 by the Cosmopolitan – The Daily, a UK based publication at the 4th Annual Cosmopolitan the Daily Business Awards 2021.
The bank has won several other awards: NDB Bank was feted with The Best Digital Bank 2021 Award at the Asiamoney Best Bank Awards for Sri Lanka; the prestigious US-based Global Finance Magazine crowned NDB Bank as Sri Lanka’s Best Bank 2021; and The Banker Magazine UK acknowledged its royalty with The Bank of the Year Sri Lanka award. The bank’s mobile app and digital banking platform, NDB NEOS, was awarded the Most Innovative Digital Banking Platform in Sri Lanka 2021 by the Global Business Outlook – UK. NDB Bank is the fourth largest listed bank in Sri Lanka and the parent company of the NDB Group, the only financial services conglomerate in Sri Lanka.
Damitha Silva, Assistant Vice President of Digital Financial Services at NDB Bank, and Deepal Akuretiyagama, Chief Operating Officer, discuss how NDB Bank is leading the digital transformation of banking in Sri Lanka.
Can you tell us how consumer and market trends and technology advancements are shaping the future of banking in this country in the context of the unfolding Covid-19 pandemic?
Undoubtedly one positive aspect of the pandemic is that the nascent-state digital economy got a tremendous boost. On the one hand, businesses are increasingly reaching out to their clients via digital channels such as online platforms and mobile apps. On the other, the consumer uptake of these digital channels has also grown. For instance, e-commerce has boomed.
We no longer see the queues, backlogs, shortages, and unavailable services prevalent during the first Covid-19 wave in 2020. Now, everyone is talking about a new normal: we see changes in the way people live, work, and consume. The game has changed, and banks are not immune to the disruptions to the old order.
Banks world over are preoccupied with establishing secure technology platforms that can support innovative web and mobile applications to meet increasing customer demands for seamless access to convenient and fast banking services. NDB Bank has been at the forefront of this digital surge in the banking sector.
Since the Covid-19 outbreak began in early 2020, NDB Bank has seen a 400% increase in digital transaction volumes and a 150% growth in total transaction value. Our phenomenal achievement speaks volumes about our digital strategy and efforts to transform banking in Sri Lanka.
Can you take us through your digital transformation strategy and the journey thus far?
It is easy to get carried with digitisation: investing in technology and building infrastructure to integrate branches and delivery outlets such as ATMs, online banking, and mobile apps. However, to be successful, you need to place customer needs first. At NDB Bank, we identified customer needs, expectations, and the pain points in their banking journey at branch level or online banking. We then focused on developing digital banking solutions to elevate customer experiences.
We invested in the most advanced technology available in the market, redesigned and reimagined user interfaces so that customers will always have fast and convenient access to our banking products and services. Our digital strategy by design coincides with the National Payments Council initiatives to enhance the digital payments landscape.
There are several initiatives worth highlighting here. We built a strong network of ATMs and Cash Recycle Machines (CRMs) around the country for both withdrawals and deposits. We revamped our mobile banking platform NDB NEOS Mobile Banking in December 2019 and launched the NEOS Online Banking channel, built on the NEOS Mobile Banking platform, in April 2020 at the peak of the Covid-19 outbreak. We simultaneously enhanced the internal workflow system to support the online user journeys and ease the tracking and management of transactions. The enhancements to the NDB NEOS platform are industry-firsts.
NDB NEOS is the flagship digital offering of the bank. When social distancing mattered the most, NDB Bank introduced NEOS Pay with NDB NEOS, a QR payment method allowing customers to make payments to merchants and pay bills on the same platform. NDB NEOS is the first app in Sri Lanka to enable banking and merchant transactions in one single app. Adding further convenience, customers of other banks can register for NDB NEOS using their other bank account details via the JustPay network.
We were the first bank to launch an AI-enabled video KYC (vKYC) based account opening in Sri Lanka. We recently launched an online account opening facility through NDB NEOS so customers can open NDB accounts through an end-to-end online journey without needing to visit a branch through AI technology for facial recognition and vKYC. We eliminated the manual work of feeding data between systems with the use of Robotic Process Automation.
We tied up with the Credit Information Bureau (CRIB) for another industry-first. We now have a hassle-free and convenient platform for customers to register and request credit reports (iReport) and individual credit score reports (CRIB Score) from wherever they are in Sri Lanka via NDB NEOS.
With NDB NEOS, customers can conduct merchant payments and banking transactions via a single app through QR code scanning, register other bank accounts as payment instruments, and view their entire portfolio, including shareholding details. We also allow customers to open fixed deposits online via NDB NEOS.
The bank opened two Phygital Branches for 100% paperless account opening and transaction processing with Robotic Process Automation. We deployed Bank2U branchless banking services where bank agents visit customers at their doorstep. We were the first bank to roll out mobile ATMs during the first lockdown in 2020.
How is NDB Bank positioned to influence the digital transformation of the banking sector in the country? How are you driving a culture of innovation and reinvention across the bank?
The bank drives its business strategy on the principle that innovation comes from within, so empowering employees to think out of the box and share their ideas is a priority. We invest in career development programmes and training because they are the ones who will unlock the promise of digital technology for customers and the bank.
Staff are familiar with all of the digital offerings of NDB Bank. Because they have experienced the convenience, they are better at helping customers to accept our digital solutions. We appointed a digitisation specialist, a new role within the Digital Financial Services Unit, to monitor processes, identify gaps and inefficiencies, and propose ways of doing things better. It requires getting involved in ongoing projects and guiding the bank’s business teams to unlock opportunities.
NDB Bank is leading the digital transformation of the banking industry in Sri Lanka. We are constantly exploring recent technologies and market trends and investing in R&D to become Sri Lanka’s best digital bank. Today, our customers can conduct almost all banking transactions without leaving the safety of home, and we have reduced operational costs and the use of paper across the bank.
Over 80% of banking transactions are on digital channels, and 51% of our customers are digitally active. In 2020, we recorded a 311% increase in NDB NEOS total value of transactions and a 120% increase in the first half of 2021: this means we surpassed the full-year transaction value for 2020 in the first six months of 2021. We estimate the year will end with more than 200% growth.
Furthermore, given the positive customer response to NDB NEOS, the bank’s fee income has seen encouraging improvement. At the bank level, overall fee and commission income grew by 9% in 2020, ahead of the industry average and peer performance. We have also seen improvement in the cost to income ratio due to the digital drive. The cost-to-income ratio for 2020 was an industry-best 37%, whereas this ratio five years ago (in 2016) was as high as 50%.