SME is a key focus area for Nations Trust Bank as we recognize it as a sector that can really unleash the potential we have in the country. over 85% to 90% of businesses in Sri Lanka are SMEs which play a significant role in facilitating the country’s economic growth while also providing 70% of employment.” said Bandara Jayathilake, Senior Executive Vice President of SME Banking at Nations Trust Bank.
Elaborating on the Small and Medium Enterprises Sector of Sri Lanka, Jayathilake said that the Bank over the past years is striving to become the ultimate banking partner that facilitates and mentors growing entrepreneurs in the country.
“Any business with a turnover of less than Rs. 750 Million falls into the category of Small and Medium Enterprises. SME is a key focus area for Nations Trust Bank as we recognize it as a sector that can really unleash the potential we have in the country. SMEs play a significant role in facilitating the country’s economic growth while also providing 70% of employment.” said Jayathileke.
Adding further, Bandara Jayathileke said, “Many believe that the primary concern of SMEs is overcoming their financial inadequacies which is a misconception. SMEs manage to source their capital from self-savings or through aid from family and friends. However, the rate of failure for SMEs remain very high with 75% closing down within seven years.”
“This is simply due to the lack of market research, planning, due diligence and most importantly the inadequate guidance they have before starting a business.”
“Understanding this scenario, we have come forward to be a banking partner that can help SMEs thrive in their businesses by facilitating them financially and as well as proper mentorship and advocacy that will ultimately contribute to reduce the high fallout rate of SMEs in the country”.
Commenting on how SMEs can increase their chances of success to retain themselves in the industry, he explained that, “Fresh entrepreneurs should not just start a business without having educated themselves about the market, competitors and financial management. They should acquire the knowledge for themselves or be prepared to hire people with those skills.”
“During our time in establishing the Nations Trust SME banking sector, we realized that our employees should be trained in order to guide the SME customers to overcome their real time obstacles.”
“Therefore, we partnered with the German non-profit organization Frankfurt School of Business to structure trainings for our staff. We launched our SME training academy with curriculums from the Frankfurt School of Business and lectures were delivered to equip our team with the skills needed to guide and mentor SME clients.”
“We have now completed over 100 seminars and have partnered with university professors and industry specialists to share their knowledge and discuss issues such as branding, capturing export markets, tax planning and post budget analysis.”
Raising a concern on where the Sri Lankan SMEs stand in comparison to the global counterparts, Jayathileke stated “Sri Lankan SMEs are lagging behind in terms of technology, mechanization and automation. We still rely heavily on manual labour.”
Even though, mechanization requires significant initial investment, it streamlines production allowing massive increases in productivity and cost efficiency. This is why we often find imports cheaper as mechanization in source countries has reduced their cost of production and increased their competitiveness in the global marketplace.
“R&D is also essential for growth but investment in R&D is sadly low among Sri Lankan SMEs unlike their global competitors. This must change because we can’t develop products and then look for markets; instead we need to understand what the market wants and then deliver”.
Setting Nations Trust’s SME services apart from others is the Bank’s drive to personalized servicing, “SMEs, like all businesses, go through good times and bad. It’s at crucial times that in such scenarios we really want to get involved and help owners understand where their business is going wrong and guide them to make good decisions whilst steering them away from a financial debacle. Most business owners don’t see that there is a problem until it’s too late but our intention is to make them aware about future threats before it escalates out of control,” claimed Jayathilake.
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