In 2020, SDB bank demonstrated its capabilities in not only meeting customer requirements but also anticipating their unique needs as the socio-economic climate became highly unpredictable in the wake of the COVID-19 pandemic. This was a period of great uncertainty for many of our customers who lost their sources of revenue and needed access to financing. As traditional physical banking systems were inaccessible during periods of travel restrictions, SDB bank was instrumental in encouraging and guiding various customer groups, that were not previously adapted to digital transaction, onto mobile and online banking platforms.

A large number of SDB bank customers are bound by physical boundaries, living from day-to-day and COVID-19 added to their hardships. Much of our work in 2020 was to support and encourage them to retain hope and look towards the future. In addition, we believe protecting our SME-base will contribute towards economic recovery in the post COVID era and we will do our utmost to help them rebuild and recover lost ground.

We classify our customers into four groups to provide more customised financial solutions:

• SMEs – micro, small, and medium sized enterprises
• Retail – providing financial services to Individual/retail customers
• Co-operatives – small clusters of individuals who collaborate with co-operative societies in grassroots communities working together to improve their lives and livelihoods
• Business banking – these are midscale businesses that do not come under the micro and SME category (that progress from SME to the next level)

Improving the lives of our customers means using every resource at our disposal, including inspiring our customers to act as ambassadors, converting more of their peers in rural, grassroots communities to take on an entrepreneurial outlook and in doing so contribute towards the country’s economy.

The SME segment

In 2020, our SME customer base continued to represent 41% of our loan book and 18% of our deposits. This segment was the most vulnerable to COVID-19 market losses and disruptions of value chains, and faced difficulties in repaying loans. Therefore, our key focus was on supporting the continuation of their businesses by extending the Government moratorium and delivering much needed support and financial assistance through our digital platforms. During this difficult period of uncertainty and anxiety, we helped them by ensuring easy access to our financial services through a range of digital services including our mobile banking, UPay, internet banking, and SMS banking facilities. The LANKAQR common QR code was integrated into the UPay app, making online payments easier and faster and new features were added for credit card settlements and fund transfers. The mobile application was enhanced with capability to open fixed deposits online. Digital signatures were implemented to facilitate loans without the requirement for physical signatures. We made it a priority to remain connected with our customers to provide a supportive hand at all times,we guided them on how to respond to this unexpected crisis. We also offer many products and services that are geared to serve this customer segment and our employees take POS machines right to the doors of these businesses for their convenience. While such services were interrupted in 2020, we have been successful in expanding the digital services for our SME customers. We continued to extend our support for companies in agri-finance, particularly minor export crops such as fruits, vegetables and horticulture. We will continue to focus on improving value chains for five key groups in this segment over the next few years, including SMEs in the tourism and IT sectors. A key aspect of this business support strategy is to build market awareness and business knowledge among our customers to develop sustainable value chains that enable growth and generate wider economic benefits. In this regards, we have partnered with The Institute of Charted Accountant of Sri Lanka (CA Sri Lanka) to enhance the knowledge of SME customers to build their value chains for the future.

52% of Sri Lanka’s population represents SMEs. Out of this, 33% are women. Therefore, we continued to focus on uplifting female entrepreneurs. While our technical training and financial literacy programmes to help them improve their businesses, could not be delivered as scheduled, we hope to continue our programmes in 2021. Our financial literacy programmes will focus on the following Three subject areas:

• Savings and loans
• Entrepreneurship
• Digital banking

The retail segment

Retail customers comprise 54% of our loan book and 51% of our deposits. This customer base consists of six distinct divisions. Such categorisation allows us to provide customer service that is tailored to the needs of each of the following segments. In addition, we focus
on some segments of society that are underserved by traditional financial services providers, such as senior citizens, women and veterans. Through our specialised products and services we contribute towards uplifting their lives and provide them with opportunities to be financially independent.

• General savings
• Minors
• Women
• Youth
• Senior citizens
• Veterans

Minors

Inculcating a saving habit among the young has been one of our long-term goals and our Lakdaru and Dayada children’s savings accounts encourage children to save for important events in their future. We believe future economic prosperity of the country depends on financially literate, proactive and entrepreneurial generations of youth who can create wealth for the entire nation. Therefore, we are actively taking measures to create a generation of young people who are financially literate, to facilitate the future growth of the national economy. Over the years we have conducted a number of programmes and competitions to encourage thrifty thinking.

Women

A key objective of the Bank, as a development finance services provider, is to increase women entrepreneurs in Sri Lanka to empower women and families through independent livelihood generation that leads to quality of life improvements for entire families. Therefore, we have introduced programmes that are structured to educate, enable and elevate women to actively contribute to the development of our economy. We place emphasis on supporting female entrepreneurs, particularly in the 35-50 age group. Many face perennial problems such as lack of collateral and businesses registered in a male relative’s name instead of their own. Education is the key to this segment’s success. While many may not have had much schooling, they have a rich social life within their communities and are able to rally like-minded women in the co-operative and SME segments.

Products such as Athamaru, which offers a three month over-the-counter gold loan (as opposed to the one-year period for regular pawning), was launched in 2019 to support women in the low income segment. This facility was a key financial support line for women entrepreneurs during financial difficulties in the 2020 COVID-19 environment that restricted livelihood activities. We also support financial literacy which contributed towards financial inclusion.

Our Uththamavi savings product creates avenues for financial independence through savings and also through the creation of investment plans to realise dreams and aspirations, while also enabling loans to support entrepreneurial activities. Modern digital financial platforms have been made available for greater convenience of women users.

Youth

We take pride in contributing towards national development by helping to ensure that the aspirations, hopes, and dreams of a future generation are met through meticulous financial planning and management. Our programmes for Sri Lanka’s younger generation of new thinkers and entrepreneurs complement their ambitions for success. We help this customer segment to develop and maintain a strong financial strategy through our SDB Jawaya youth savings account. In addition, the modern digital payment platform UPay, which is easy to use and hassle free, has helped young people meet their financial needs for personal requirements, or for entrepreneurial purposes.

Senior citizens

We, as a bank, have identified the growing population of senior citizens and our efforts are to actively transform this segment to support the economy in small but effective ways. With our long history of catering to senior citizens this is an area in which SDB bank has a real competitive advantage. As much as 23% of the loan book and 24% of liability book are from this customer segment. Retired and often lonely, these customers look forward to their monthly visit to the branch to collect their pension. At SDB bank we go all out to make the day memorable for them.

In addition, we also encourage our seniors to take part in entrepreneurial activities. Under normal circumstances, branch employees encourage seniors to think in an entrepreneurial manner. Many have skills and social connections that would benefit SMEs. Getting involved in entrepreneurial activities would also boost this segment’s confidence and sense of self-worth while ensuring that they remained mentally and physically active.

We serve this segment best through SDB Upahara. Going forward we plan to organise free health checks for these customers, and increase their loyalty towards the brand.

Veterans

Thirty years of ethnic strife came to an end a decade ago but, as a country, we continue to salute the brave men and women who gave up their lives and limbs to safeguard the people. SDB bank has long been focusing its energies on ensuring that veterans and their families are not left behind as this hard won peace gives way to economic development. When a veteran reaches retirement age his or her family’s income drops steeply. The dip in income usually coincides with a time in their lives when funds are more essential than ever. We help our veterans to prepare for significant milestones in their lives and of course their own retirement through a range of financial literacy programmes and our Uththamachara product.

The co-operatives segment

This customer segment comprises 5% of our loan book and 29% of deposits.

Business volumes for this sector are currently at 17% – a number that we hope to grow to 33% over the near future. In preparation for this push we restructured the Co-operative Development Department at SDB bank to promote entrepreneurship among co-operatives. Many co-operatives have ready cash, which they bank with SDB bank and then lend-on. By fostering an entrepreneurial culture within the co-operatives, we hope to drive wealth creation and job creation among grassroots communities. While hospitality and food and beverage type services have flourished among certain entrepreneurial co-operatives, we focused on creating awareness about two other areas – medical and fitness. Laboratory services received a satisfactory level of success but gymnasiums did not receive the kind of take up that we had anticipated, driving us back to the drawing board to study better alternatives. During the year under review, we maintained close contacts with the co-operatives regulators on how to work together to meet common goals.

Welcoming everyone

The new branding that was launched in 2019 contributed to cool, orderly interiors, infused with our corporate colours, that present a welcoming appearance to our customers. With every new building agreement, we will be incorporating the new look and feel to ensure that our customers across the country come to associate us as a beacon in the community.

Through our range of products and services we are facilitating overall national economic development, and in the post-Covid era we are contributing directly towards economic recovery and normalisation by supporting businesses, micro enterprises and individuals to return to financial stability. Following up from 2019, when we installed 100 internet banking kiosks in co-operatives across the country, we used the COVID-19 restrictions on movements in 2020 to fast track digital onboarding of co-operative communities. Our goal is to introduce digital platforms to people from all walks of life with a special focus on rural communities, to improve efficiencies and get them up to speed with global advancements.

Towards nation building

While our main goal is wealth creation, particularly for those in grassroots communities, we also contribute towards nation building through the many initiatives we have launched for our key customer groups. Our transformation agenda is closely aligned with the United Nations Sustainable Development Goals. Sri Lanka initiated the Sustainable Development Act in 2017, which establishes the legal framework to implement the SDGs with improved institutional and policy coherence. Under this Act, the Sustainable Development Council has been established, which formulates related national policies and guides new development projects. This takes on added significance for SDB bank given that, for a majority of our clients, meeting SDGs such as Zero Hunger, Quality Education, and Reduced Inequalities are crucial to the betterment of lives.

Internet penetration in Sri Lanka continued to grow during the year and stood at 50.8% in January 2021 with 10.90 million internet users, according to the Digital 2021: Sri Lanka report. The growing numbers of Internet users have caused changes to lifestyles and how people communicate and conduct transactions, leading to greater demand for digital products and services, including digital financial services. With the launch of a number of digital platforms we are helping to convert grassroots communities into digital bankers, while also providing them with greater convenience and access to financial services. The launch of such innovative products and services has also allowed us to better streamline our operations and business.

New products (initiatives) launched during the year under review include:

• LankaQR, the common national QR Code for the UPay payment app (Digital inclusion through Rata Pura Lanka QR initiative to promote UPay app usage
• Enhancing the SDB mobile banking app with the facility to open fixed deposits
• Facilitation of digital signatures
• Tablet based customer screening for small credit facilities that fast tracks credit disbursement
• A new leasing system was introduced and will be fully deployed in 2021
• Online administration of legal cases

Delivering value to our customers

Savings products

Product name	Financial inclusion and financial wealth	Financial literacy and social wealth
	Saving for the future Insurance cover (including government hospitalisation) Higher interest rate compared to regular savings Target market is children	Developing savings habit Scholarship seminars for children Seminars for parents on child psychology Offering valuable, educational gifts for children
	The best benefits in the market for savings An investment plan to realise dreams Loan up to LKR 1 Mn. for entrepreneurs SDB mobile app facility and bill payments through UPay app Target market is women	Provides avenue for financial independence with a helping hand always outstretched in support of the customer
	Multiple convenient digital banking platforms A special interest rate of up to 6% per annum Incentives for account holders who maintain an account balance of LKR 100,000.00 for 24 months Target market is youth	Supporting the youth to develop and maintain strong financial strategies
	Offered highest interest rates to customers Unlimited withdrawal Multiple convenient digital banking platforms	Fostering a culture of saving and financial management in Sri Lanka
	Lump sum deposit ensures a guaranteed return despite interest rate fluctuations Investment certificate can be encashed upon turning 18 years of age	Encouraging saving for a child’s significant future aspirations such as higher education, business investments or a wedding
	Higher interest rate compared to standard savings schemes Payment date for monthly investment based on customer preference Target amount and period of investment chosen by customer	Providing financial independence for women Contributes towards a stress-free, financially secure future
	Interest calculated on daily basis based on the day-end balances and credited monthly Multiple convenient digital banking platforms Savings product for who seek higher interest rate	Encouraging enterprising and fast progressing businesses in Sri Lanka to save for the future

Main Fixed Deposit products

Product name	Financial inclusion and financial wealth	Financial literacy and social wealth
	Attractive higher rate of interest Immediate cash back facility of up to 90% of deposits	Inculcating a savings habit
	Attractive interest rate of 15% per annum for to LKR 1.5 Mn. for those over 60 years of age A special interest rate for those over 55 years of age

Main Loan/leasing products

Product name	Financial inclusion and financial wealth	Financial literacy and social wealth
	Customised leasing packages with flexible repayment schemes at competitive rates Attractive discounts on premature settlements Leasing facilities for private and commercial vehicles	Enabling vehicle ownership
	Longer repayment period Flexible approach and fast approval Attractive and competitive low interest rate	Encouraging and enabling home ownership
	Top up facility – after repaying a part of the original Personal Loan Choice of fixed or floating interest rates Processed within a maximum of three working days	Providing funds for emergencies or meeting life goals
	Purchasing options for gold jewellery, gold coins or gold biscuits at competitive interest rates	Encouraging investment in gold
	For Ranaviru families of Army/Navy/Air Force/Police/ STF who are Killed in Action (KIA), Missing in Action (MIA) and Disabled in Action (DIA) Loans up to LKR 7 Mn. Repayment period up to 10 years Automatic loan protection cover for all applicants	Seminars aimed at improving financial literacy Entrepreneurship development through Uththamachara loan facility, for combat veterans suffering from disabilities as well as Ranaviru families of diseased/missing military personnel, to support income generating ventures and activities.
	A three-month gold loan facility 0% interest rate per annum Account holders can obtain an advance loan amount of 90% of the total gold value	Providing low-risk credit transactions for personal or business emergencies
	For Government and CEB pensioners Loans up to LKR 3 Mn. without guarantors Repayment period up to 10 years, and 75 years of age Our extended support to transfer the pension remittance to the account quickly and conveniently. A loan protection cover with lowest insurance charge A competitive interest rate for savings	Seminars for Government pensioners, veterans and Ranaviru families Through the loan protection cover dependents are relieved from the debt in the event of the sudden death of the borrower Solution for an aging population enabling them to rejoin the workforce
	Maximum advance amount for a Sovereign (8g) 18K/24K of gold Competitive low interest rates Ensured accuracy of gold weight and value with the latest equipment Benchmarked services that guarantee speed, privacy and the highest level of confidentiality	Secure and confidential monetary assistance in times of need through pawning of gold or gold jewellery for urgent cash on credit
	Reasonable rate of interest with a suitable grace period Loan values to suit business requirements with a flexible repayment schedule aligned with income pattern and payment capacity Business guidance and consultancy services	Quick access to financing for SMEs that are launching a business or expanding an existing enterprise Financial literacy and entrepreneurship workshops
	Loan facilities up to LKR 1 Mn. with two guarantors Repayment period of up to 5 years for capital financing and up to two years for working capital for applicants who hold 50% or more ownership of a business	Loan facilities for young male entrepreneurs which help meet diverse business financing needs and drive our local economy forward
	Microfinance loans SME loans Personal loans of up to LKR 10 Mn. Insurance benefits for those obtaining a loan	Financial independence
	Loans for any recognised business holder, from LKR 50,000.00 upwards Loan facilities from LKR 250,000.00 up to One Million to fulfil production or business needs of societies/ associations SDB Divi Saviya Leasing Facility (Up to LKR 500,000.00) – Hand Tractor – Motor Bicycle – Three Wheelers (Brand New/Used) Repayment Period up to 3 years Providing technical knowledge and business consultation Fully fledged online banking experience with Business Internet Banking Fund transfer facilities via SDB Mobile App Enabling the acceptance of digital transactions through UPay App’s digital solutions Quick and hassle free loan facilities from the island wide branch network	To develop an existing business To purchase new machinery and equipment To upgrade to new technology For any other business need such as the development of packaging or distribution infrastructure

Co-operative products

Product name	Financial inclusion and financial wealth	Financial literacy and social wealth
Loans for Society	Unsecured loans up to LKR 2 Mn. at prevailing interest rates Repayment period up to three years in monthly instalments, with a 3-month grace period.	Supporting SANASA Primary Societies which lack sufficient funding to increase assets and in turn develop and support smaller, dependent societies
Loans for Members Agricultural loan	Repayment period of one year at prevailing interest rates, with a maximum of a 6-month grace period Repayment can be made monthly, or as a bullet repayment Loan amount depends on the capacity of the society, and can go up to LKR 20 Mn. with no collateral	Meeting demand for urgent working capital to improve growing crops, raising livestock, and improving operations of small to medium-scale plantations/farms
Equipment/ Machinery loan	Repayment period of three years in monthly instalments at prevailing interest rates Loan amount depends on the capacity of the society, and can go up to LKR 20 Mn. with no collateral	Helping members to preserve the income of their business by spreading out the cost of equipment or machinery over a 3-year period
Export/Import loan	Repayment period of one year at prevailing interest rates, with a 3-month grace period Repayment can be made monthly, or as a bullet repayment Loan amount depends on the capacity of the society	Empowering members through their respective co-operative/society Supporting members in their endeavour to contribute to the national economy
Tech loan	Repayment period of three years in monthly instalments at prevailing interest rates Loan amount depends on the capacity of the society, and can go up to LKR 20 Mn. with no collateral	Empowering members of co-operatives with the opportunity to invest in computers, laptops and other equipment, to join in the global digital revolution and not be left behind
	Highest interest rate of up to 10% for savings Interest calculated on daily basis based on the day-end balances and credited monthly Loan facilities against savings balances with ability to avail up to 80% of the deposit for a one year loan renewal period	Encouraging enterprising and fast progressing businesses in Sri Lanka to save for milestones and a brighter future
SANASA Co-operative/ NGO Savings		Helping accelerate the progress of the rural economy, the SANASA co-operative/NGO savings account aims to connect rural co-operative societies and NGOs as significant contributors to the national economy, thereby nurturing financial equality and stability across Sri Lanka
Sahanya	Special interest rates Special bonus interest of 40% of the cumulative interest paid when required minimum balance of LKR 100,000.00 is maintained during a period of one year 60% cash back loan facilities	Adds value to community causes and reduces financial service costs for societies
	Additional 0.25% interest for fixed deposits Coverage for entire co-operative segment (including society employees)	Capacity building training programmes and thrift month financial literacy programmes were scheduled, but could not be held in 2020 due to restrictions on travel and gatherings in the COVID-19 environment.