FINANCIAL SERVICES
Dilshan Rodrigo
UPLIFT THE RURAL ECONOMY
Sri Lanka’s MSME sector must be helped to grow with access to funding
Financial services today
Shaken up like never before.
The road ahead
Fewer, larger and nimbler institutions will form the bedrock for the revival, sustainability and growth of MSMEs (micro, small and medium enterprises), which are vital for the country.
Trends
The informal sector’s erosion, financial services consolidation, growth in pawning, strengthening production economy, QR-based payments and digital marketplaces.
Strengths
Resilience, import restrictions boosting local industry, emergence of new entrepreneurs in digital marketplaces and freelancers marketing their services globally.
Shortcomings
Lack of support for startups without collateral and not encouraging freelancers to bring back monies parked overseas.
Failure
Not preventing the relentless brain drain of youth and professionals.
Obstacles to growth
High interest rates, which deter investment.
Evolving customer behaviour
Embracing the digital lifestyle.
Digitalisation trends
Cashless, cheque-less and paperless access to financial services, loyalty to convenience and price, and social media being a key influencer and shaper.
Local growth barriers
No level playing field for banks and non-banking financial institutions (NBFIs).
Credit crunch
Lack of credit reports or collateral when lending to borrowers at the bottom of the pyramid, and limited access to finance or capital.
Scope in Sri Lanka
The MSME sector accounts for 99.8 percent of business enterprises.
MSMEs’ contribution
Employing about half the national workforce and contributing more than 50 percent to the country’s GDP.
NBFI sector
The customer base of NBFIs comprises 80 percent of the nation’s business establishments – but most can’t access banks.
Needs of the hour
Help business revival efforts, support entrepreneurs in their initiatives and strengthen supply chain linkages.
Revival mantra
Improve financial literacy and the movement of enterprises to digital marketplaces with increased exports.
Women entrepreneurs
Many lending enterprises favour granting loans to women due to their sense of responsibility, commitment and financial acumen.
Ways to overcome challenges
By improving value addition to their produce, fruit and vegetable sellers are retailing jams, chutneys, pickles and so on.
Financial services today
The financial services industry has taken a massive hit in the form of customer impairments, which has impacted earnings and capital.
The way forward
A fewer number of larger and more capable institutions should strengthen this vital industry, and support business revival and growth.
Industries and sectors that need attention
Agriculture, assembly, manufacturing, import substitution, exports and knowledge outsourcing.
Emerging payment technologies
QR-based payments, digital wallets and domestic cards will play a vital role in Sri Lanka becoming a cashless economy.
Digital security in business insurance
Necessary investments in digital security must go hand in hand with digital transformation efforts.
Competition drives innovation…?
Yes, the level of innovation in NBFIs has lagged behind banks in Sri Lanka unfortunately, which in turn are well behind their regional and global peers.
Opportunities to improve financial inclusion
The government should support infrastructure development such as facilitating transport cards and domestic, digital IDs and e-government.
Lack of progress
Unfortunately, we have been stalling without taking a cue from India, which has taken massive strides in this area.
Qualities needed for a career in finance
A passion for this vocation is the key.
Window of opportunity
Dealing with the poor and marginalised members of society – we can provide them with opportunities to make a difference in their lives.
Sectors that would benefit
The rural economy in general and the country as a whole.
Perspective on poverty
No one will choose poverty if we give them the ability, talent and motivation to develop.
Potential of digitalisation
To democratise everything from education and learning, to marketing products and services globally, and eradicate corruption in the process!
Vision for payment technology
A simpler and more secure and affordable payment solution for everyone.
Mantra for success
A passion to make a difference to the lives of others by committing to become a better version of yourself every day.
