The refreshing tenacity of CDB:
CDB at 25: Against all odds, a close-knit team pulled off a Phoenix-like restructure. Devoted to empowering aspirations, team CDB is as single-minded today about a digital transformation.
CDB’s journey in the financial services industry began in September 1995 and the 25 year journey has truly been against the odds.
While fortunes in the early years were not auspicious when by 2001/02, it had gradually descended into the realms of a loss making negative net worth Company, a committed, passionate and young team decided to change its course.
Determination, fortitude, and a strength of purpose drove this team to produce extraordinary results via an
intrepid team that navigated CDB through devastating challenges including the Ceylinco crisis in 2008/09.
Today, CDB stands among the Top 5 largest NBFIs in the country having harnessed the maximum potential of the postwar economic boom in Sri Lanka during the last decade. Its quantitative results during the last decade (2010-2020) tell the story: CDB has seen its total assets grow by 13 times, revenue by 09 times and PAT by 21 times.
This then is the story of a company that harnessed the extraordinary strengths of ordinary people to make it work not just for the company, but for each stakeholder.
While people grappled with each unfolding chapter that COVID-19 wrought, businesses wrestled with keeping entities afloat amid unprecedented challenges.
The financial services industry in Sri Lanka had its own share of continuous upheavals which also meant stability and continuity of business stood on shaky ground.
Through these encounters however, Citizens Development Business Finance PLC (CDB) showcased a defiance of the present and a leadership in the unexpected.
Its business plan had already prepared the Company for eventualities and with some quick tweaks, CDB was open for business, placing its strengths firmly on its robust technological foundation melding a strong formula of trust, care and solid relationships.
Managing Director and Chief Executive Officer of CDB Mahesh Nanayakkara is confident in the course chartered for the Company since his entry into CDB twenty years ago, where an extraordinary team of ordinary people led the way to create an entity whose end goal is to empower the aspirations of people from diverse social backgrounds and demographics.
Here, he discusses the company’s unprecedented journey since its founding 25 years ago, the strategic leadership infused to transform it into a pioneering entity, and the digital disruption CDB is spearheading to transform into a ‘TechFin’ Company. Excerpts of the interview are as follows:
As CDB celebrates its 25th anniversary, can you take us through the formative years and journey thus far?
Nanayakkara: Our inception was in 1995 and for nearly a decade, we struggled considerably.Our inception was in 1995 and for nearly a decade, we struggled considerably. Our balance sheet wasn’t strong and the net value of the Company was in the negative.
When I joined CDB, this was the canvas we had. But the one asset we did have was a young, highly motivated team which was determined to work towards a singular goal – to turn the company around.
This dynamism fueled a motivation to draw an action plan. Remaining with the fundamentals, we set ourselves targets, budgets and timelines.
One of these was that CDB must become profitable by 2004 but with the quantifiable profitability target of RS.10 Mn added in.
The rewards came within the year 2004, the goal was achieved and by 2005, profitability was firmly on an upward trajectory and a negative book value turned positive. Our team had truly shown its mettle.
They seemed to have an innate desire to run against the odds and this made us want to continuously set ourselves ambitious growth targets supported by astute growth strategies.
This is when the continuous refrain of ‘Strategy bets on people’ became reality. Our team, irrespective of demographic origins, shared the same values, had the same aspirations and envisioned the same future for CDB.
There was a hunger in us to unite as a team and transform this business to one that makes a real difference.
Our financial discipline was and continues to be beyond compliance, governance is immaculate, and transparency and accountability above board.
When the Ceylinco crisis hit us in 2008/09 the strength, reputation and trust we had founded our business upon came to the fore. With flexibility being at the core of our business strategies, we once again remapped and re-strategized our plan.
This plan included a corporate name change, rebranding, reconstitution of the Board of Directors, change of regulatory status and a relocation of the Head Office.
Armed with these and our turnaround plan to ensure CDB’s continuity, we approached the Central Bank for regulatory approval.
Evaluating our past records, present plans and quantifiable map for the future, the regulator gave us an affirmative nod and Citizens Development Business Finance PLC was born.
I am truly grateful to the then Governor and officials of the Central Bank for being confident of our ability to execute our ideas and plans and the trust they placed in us at a very arduous time. I have always believed that the tone of leadership is a crucial guiding factor in guiding a team to success.
In the stressful times we endured between 2001 and 2010, we navigated through crises and turned around our financials due to the astute leadership of former Chairman Rajkumar Renganathan. With him at the helm, the checks and balances were put in place and CDB had the courage to step forward confidently.
Corporate reputation, public confidence and stakeholder trust were challenged but CDB’s bold and fearless persona defied the odds, once again. And in tandem, CDB began etching milestones and planning bigger and better.
On October 6th 2010, CDB was listed on the Colombo Stock Exchange and CDB set for itself a target of becoming a Rs 50 Bn company by 2015. But given that we were already racing ahead towards that target with the end to the war heralding an economic boom for Sri Lanka, that target was refocused – CDB at that time in 2010 with a balance sheet size of Rs 10 Bn wanted to reach a balance sheet value of Rs 100 Bn in the decade ending 2020.
The unbreakable thread to be observed in all this is the unique dynamism in our people. They are integral to our success and the formula that CDB has imbibed into our forward journey is that our team must grow with us.
Our business plan unveiled at the beginning of each year communicates the Company’s annual objectives.
These objectives are further honed via a letter presented to each team member, detailing the objectives for the year and their individual contribution towards set targets. Our high achievers are celebrated annually, good work-life balance is encouraged and fellowship and camaraderie is promoted at numerous events organized throughout the year.
As we look to the future, we envision becoming an impactful entity. Our passion is to uplift livelihoods, improve financial inclusivity and contribute towards the economic development of this country. People and sustainability are at the core of our daily business operations.
We work on the equation of being a net lender to the rural economy on a formula of ‘Rural lending – Urban funding’ on the tenet: Empowering Aspirations – across social and geographical boundaries. Having placed a strong foundation through the building blocks of transformation, leadership, astute management and strategic vision, we also added technology into our overarching success formula.
This focus gave our pioneering status an exciting push when we became the first NBFI to invest in a core-banking system way back in 2011 that added a competitive edge and infused dynamism, efficiencies and security.
Our end aim is to reach beyond the norms of the financial services sphere – both in NBFIs and banks – it’s an ambitious target but the wheels are already turning.
Having built a pioneering culture within CDB, our team focused on continuous innovation, which meant CDB began rolling out a number of first in the NBFI industry including operating SLIPS, issuing Visa debit cards, and linking up with the banking system’s ATM network. And that unrelenting focus on accessible technology saw CDB become the first to use social media networks to transfer funds and open online FDs.
We also added this ‘first’ mindset into our environmental commitment becoming the first to be conferred ISO14064-1 carbon certification and initiate ‘Green’ asset backed securitisation.
What is the role of digital technology in shaping the future of CDB?
Nanayakkara: We are into the last year of the decade in which we had set for ourselves the target of becoming a Rs 100 Bn company in terms of total assets.
Despite the challenges this year, we are confident that the target will be met. Looking ahead, our next decade is all about tech.
We will move beyond being a financial services entity to make technology the core fundamental of our journey.
We will think and act like a tech company with a regulatory license. Our strategic plan for the next decade embeds this and our key intent is to become a ‘Techfin’ company by 2030.
This technological foundation will form the core in transforming our mindset from one that thinks like a financial entity to one that thinks as a technology company. This is our intent and the vision that will drive the decade 2021/30.
Nanayakkara: Our 25-year journey amply demonstrates that resilience is part of our DNA. COVID-19 has already demonstrated the power of going digital and there’s rapid gains from early adoption of digital technology.
In the early days of COVID-19, our priorities were to protect our team and customers by stringently adhering to prevalent health and safety standards.
In the immediate onset of the virus crisis, CDB deployed an emergency task force to ensure our offices become fully functional, aligned to the elements embedded within our Business Continuity Plan (BCP). Customer service continued uninterrupted with technology at the fore.
Our internet banking platform (CDBiNet), ATM networks for unlimited accessibility and our Call Center worked 24×7 were fully operational.
Our team also adopted WFH (Work from Home) features into their daily routines quickly, ensuring uninterrupted customer service.
We also extended all relief measures as per the regulator’s guidelines to customers, while augmenting these measures with some of our own – all of which were immediately effected.
This focus on continuity has, at present, seen CDB return to almost pre-COVID levels in all aspects of our business operations
How important is sustainability in realising CDB’s ultimate vision?
Nanayakkara: CDB continues to adopt a socially, environmentally and economically inclusive approach which has led to sustainability becoming an inseparable element in our journey towards achieving our vision.
The systematic, quantifiable approach which encourages utilization and optimization of the least amount of resources, having minimum impact on the environment while supporting community clusters, targeting children health and education, employee volunteerism and empowering entrepreneurs are all within the larger vision of CDB’s sustainability plan.
Looking beyond 2020
Nanayakkara: Our very ethos is about empowering aspirations and this means, the aspirations of citizens at all income levels, social boundaries, diverse communities and the nation collectively.
Working towards financial inclusion, we use our core business model of urban funding for rural lending, thus being a net lender to the rural economy combined with technology to make finance for all demographics more accessible.
While single-mindedly working towards a greener planet where CDB has made headlines in reducing carbon footprint and pioneering environmental initiatives, our focus has also been to spur entrepreneurs focusing on the rural demographic and the base of pyramid economy.
Looking towards the next decade, our strategy is to clearly define a broader direction, which as I mentioned, is to be an NBFI with the mindset of a tech company and to become a quarter of a trillion asset base company.
Having placed the building blocks to constructing a strong resilient and stable company where a committed and passionate team have honed our business fundamentals, we are now ready for the journey into the next decade.
As we embark on this journey, CDB is firmly committed to using our tech capabilities as a conduit to access financial services by people of all walks of life across multiple social boundaries covering the entirety of the country, ensuring financial inclusion and elevating livelihood standards of Sri Lankans with our purpose of empowering aspirations.
In tandem, we will be equally committed to minimising our carbon footprint and committed to contributing towards a greener economy.
On the macro canvas, COVID-19 is stimulating a green recovery driven by a digital economy. We have both these elements in place and are well positioned to embrace this emerging era and infuse it into the way we do business, successfully overcoming post-COVID challenges.