LMD 100 Q&A
FIRST CAPITAL HOLDINGS
Q: What are the main challenges facing the financial services industry?
A: Sri Lanka is facing many macro environmental challenges that are spilling over to all industries – including financial services and capital markets.
The biggest challenge for the industry is the depletion of Sri Lanka’s foreign reserves. Since the Easter Sunday bombings in 2019 and pandemic induced lockdowns, a key source of foreign exchange income reduced substantially over the last three years – i.e. tourism.
COVID-19 has also resulted in the government spending domestic revenue on social welfare to provide vaccines, benefits to the underprivileged, medical facilities and more.
On top of this, we’ve had to face the consequences of changes to the tax regime to stimulate the economy.
Sri Lanka is experiencing an unfortunate period economically, which is due to circumstance – i.e. an exaggeration of bad times fuelled by the pandemic.
Q: How is First Capital Holdings navigating these challenging waters?
A: The capital markets have seen many players shifting to technology powered innovations such as onboarding customers digitally as encouraged by the Central Bank of Sri Lanka and Securities and Exchange Commission of Sri Lanka (SEC).
Owing to COVID-19, this welcome change enabled us to progress from physical form filling to a quicker, easier and more accurate method.
Digitalisation is the future and First Capital strives to be a harbinger of digitally driven changes to better the markets.
Q: What is your outlook for the investment landscape in the post-COVID landscape?
A: We’ve had low interest rates for some time, resulting in investors flocking to equity investments. However, we foresee a reversal of this phenomenon. This will result in people opting for fixed income investments, and equity markets may stagnate and then decline.
The real estate market is performing well now but this too might witness a decline in growth unless it becomes a part of capital markets through innovative bundling options such as REITs.
First Capital is looking at how to best advise clients to move between asset classes – viz. fixed income investments, equity markets and real estate – to earn the highest returns. For us, it’s about informing clients when to switch and invest, and how to preserve and build their wealth.
Q: How has the company embraced innovation and change?
A: First Capital conducted a detailed study to revamp its brand promise and identity. We now focus on ‘Performance First’ as the key aspect of our identity and in how we serve customers.
We’re also concentrating on enabling customer convenience. Presently, we are looking at measures taken by other sectors such as banking with online transactions, e-wallets and so on. First Capital has always been an advocate for disintermediating financial services, and bringing investors and issuers together through its digital platforms in a far more efficient way.
The company has also continuously invested in developing staff to be world-class by implementing timely and innovative solutions and processes.
For example, we introduced working from home (WFH) and flexible working four years ago. We were accredited by Great Place to Work® in Sri Lanka for the first time in 2021 – testimony to continuous efforts to ensure that staff members are happy and empowered.
Q: What are First Capital’s plans for the coming months?
A: First Capital is passionate about innovation when it comes to packaging and selling government securities and other investment products to a broader client base.
Recent innovations include unit trusts positioned as alternatives to savings accounts – this feat has enabled us to manage one of the fastest growing money market unit trust funds in the country. We will be looking at more avenues to innovate in future.
The derivatives market is one such area we’re eyeing to enable investors to hedge portfolios against rising interest and forex rates. Volatility translates to opportunity and we are focussed on capitalising on this.
We want to explore and capitalise on the REIT space, given the potential in the local real estate sector and growing demand.
Being a part of the Janashakthi Group, we’re also looking at the possibility of bundling products such as life insurance and real estate to offer investors better and more profitable portfolios.
