Recognising small and medium-sized enterprises (SMEs) are the backbone of Sri Lanka's economy, contributing significantly to gross domestic product (GDP) and employment as well as the pivotal role they play, Seylan Bank has committed itself to empowering these businesses, focusing on a strategy that combines digital innovation, financial inclusion and tailored banking solutions. In 2024, the bank's approach to SME banking has evolved to embrace not only traditional banking methods but also transformative digital tools, aiming to cater to the diverse needs of SMEs in a rapidly changing financial landscape.

A focus on quality and resilience

Seylan Bank’s strategy in 2024 revolved around cautious yet focused growth, ensuring that it onboarded high-quality customers and navigated the prevailing economic challenges with care. As Ranil Dissanayake, Deputy General Manager of Branch Credit, explained, the bank’s approach prioritised stability over aggressive market expansion. “Our strategy has always focused on maintaining quality growth, especially in the middle-market SME segment, which we believe has shown resilience despite the economic climate,” he said.

Economic challenges, such as rising interest rates and fluctuations in the exchange rate, have certainly put pressure on businesses, but Seylan Bank’s measured approach has allowed it to thrive. Dissanayake elaborates, “The challenges posed by interest rate hikes and the volatility of the exchange rate have definitely made this year difficult for many businesses, but we’ve maintained a steady course by carefully selecting the businesses we work with.” This strategy has been particularly focused on the middle-market segment, which has shown resilience during tough times, making it a priority for the bank. “The middle market, particularly those SMEs with a solid track record, has been a focus for us this year. These businesses tend to be more resilient, especially in times of economic stress,” Dissanayake noted.

Through this approach, Seylan Bank has been able to onboard new clients, particularly those from competitors, resulting in a remarkable increase in new customer acquisitions through its digital channels. “We saw great success in onboarding clients, particularly those from our competitors, because our approach to SME banking is built on personalised solutions that cater to specific business needs,” Dissanayake explained. Despite the challenges, the bank is poised to see a 5% growth by the end of 2024, a testament to the effectiveness of their strategy.

 Simplifying banking for SMEs

Seylan Bank’s digital transformation has played a crucial role in its SME banking strategy, particularly through the introduction of SeylanPay and the Seylan Merchant Portal. These tools have empowered small businesses to easily accept digital payments, significantly enhancing financial inclusion. Chaminda Senewiratne, the Head of Digital Banking Channels, explained the rationale behind these innovations: “Our primary goal with SeylanPay and the Merchant Portal has been to simplify the process of accepting payments for SMEs, allowing them to focus more on running their businesses rather than worrying about payment systems.”

In addition to simplifying payments, Seylan Bank has also introduced electronic know-your-customer (eKYC) technology to make the account opening process faster and more convenient. Senewiratne noted, “With eKYC, we’ve reduced the onboarding process significantly, making it easier and faster for new clients to access our services remotely, without the need for face-to-face interactions.” This digital solution has been particularly beneficial for SMEs that need quick access to banking services but may not have the resources to visit branches in person.

The bank’s hybrid approach combines the accessibility of digital solutions with the personal touch of traditional banking. As Senewiratne explained, “While we’ve embraced digital solutions, we’ve kept the human touch where it’s needed. Our hybrid model ensures that we cater to SMEs that still value in-person interactions but also want the flexibility of online banking.” This balance has been integral in ensuring that SMEs feel supported while navigating the complexities of modern banking.

Looking ahead, Seylan Bank is keen to build on these innovations. “We are already working on integrating artificial intelligence (AI) to better understand our clients' needs and to offer more customised and structured financial and transaction solutions that align with each business’s goals,” says Senewiratne. The bank’s focus on AI and machine learning demonstrates a clear commitment to staying ahead of technological trends and ensuring that SME clients benefit from cutting-edge solutions.

Tailored products for women entrepreneurs and underserved segments

Seylan Bank’s commitment to financial inclusion is evident not only in its digital innovations but also in its targeted initiatives aimed at underrepresented groups, particularly women entrepreneurs. “We launched the Women Entrepreneurs’ Loan Package under the name of Dinana Aya and Winning Women to support female business owners who face unique challenges. This initiative is part of our broader goal of promoting financial inclusion for all,” said Dissanayake. By creating financial products specifically designed for women, the bank is helping to bridge the gender gap in the SME sector and enable female entrepreneurs to access the capital they need to grow their businesses.

In addition to these targeted products, Seylan Bank has also worked at ensuring SMEs from underserved communities, such as those in rural areas, have access to financial tools and services. “Beyond just providing loans, we also understand the importance of financial literacy. Our workshops help SMEs better manage cash flows, understand loan structures, and make informed financial decisions,” Dissanayake explained. These financial literacy programmes are designed to empower businesses with the knowledge they need to thrive, particularly in an increasingly digital world.

The bank’s efforts to support financial inclusion are also reflected in its partnerships with various business chambers and government agencies. Dissanayake highlighted, “We work closely with business chambers to ensure that SMEs, particularly those in rural areas, have the necessary tools and knowledge to access financial services.” This collaboration extends the bank’s reach, ensuring that its financial services benefit a broader segment of the SME population.

Retail payment solutions and merchant acquiring

Seylan Bank’s merchant acquiring business has also evolved, with a focus on onboarding quality merchants that benefit from the bank’s digital solutions. Dissanayake explained, “We’ve shifted away from simply increasing the number of merchants we onboard. Instead, we focus on quality, ensuring that the merchants we partner with benefit from our tailored solutions.” This strategic shift has allowed Seylan Bank to build stronger, more sustainable relationships with its merchant clients.

Solutions like SeylanPay have helped reduce SMEs' reliance on cash payments, offering them secure, efficient digital payment alternatives. “Our goal is to encourage SMEs to move away from cash payments by offering secure, efficient digital solutions that make transactions faster and safer,” said Senewiratne. By enabling merchants to accept payments via direct debit, mobile payments, and quick response (QR) codes, Seylan Bank has played a pivotal role in the growing digital economy.

Through SeylanPay and the Seylan Merchant Portal, the bank has not only simplified transactions for SMEs but also helped them reach new customer bases. “We’ve seen an increase in merchant sign-ups because of the ease and flexibility of SeylanPay. This solution addresses the specific needs of SMEs by allowing them to accept payments in different forms,” Senewiratne noted. The bank’s efforts to enhance its merchant acquiring business have led to a noticeable uptick in digital payment adoption among small businesses.

Role of technology in SME banking

As Seylan Bank looks to the future, its focus on technological integration and personalised banking solutions is set to drive further growth. AI and machine learning will play a key role in providing more customised solutions for SMEs, helping them optimise their banking experience. “The future of SME banking lies in customisation,” Dissanayake explained. “We are looking at using AI to better understand our clients' needs and offer tailored financial solutions that suit their specific requirements.”

Additionally, the bank is closely monitoring emerging trends such as embedded finance and supply chain finance, which are expected to play a larger role in supporting SMEs’ working capital needs. “We’re focused on developing solutions that address the working capital needs of SMEs. These are critical in ensuring the long-term success of smaller businesses,” said Dissanayake.

With a commitment to technology and innovation, Seylan Bank is well-positioned to continue supporting Sri Lanka’s SME sector. As Senewiratne concluded, “We’ve made significant strides in digitising our banking services, but this is just the beginning. Our plans for future digital innovations will ensure we remain a trusted partner for Sri Lankan SMEs.”

A sustainable path forward

Seylan Bank’s approach to SME banking, financial inclusion and digital transformation underscores its commitment to empowering small businesses in Sri Lanka. By focusing on quality growth, embracing digital innovation, and providing targeted support for underserved groups, the bank is not just helping SMEs thrive today but also ensuring they are prepared for future growth. With a strong focus on personalised services, financial inclusion and advanced technological integration, Seylan Bank is set to continue its thought leadership and innovation in the SME banking sector, fostering a more inclusive and digitally enabled economy in Sri Lanka.