Material Matters

As the COVID-19 pandemic tailed off, newer trends and developments surfaced with multiple influences on the banking operations. The acceleration of the demand for digital banking prompted the Bank to further augment its digital offering around customer value streams encompassing the entire customer journey from beginning to end. In particular, the wave of digital products that were introduced since 2020, stood as key innovations, helping in the transformation of a “footfalls” culture into a shelf of digital products at the stakeholders’ fingertips. While ushering timely change, the Bank helped stakeholders not just to migrate to digital channels, but to adopt environmentally-responsible practices in their business operations focused on reducing the carbon footprint. The Bank emerged from the pandemic into a whole new era of green precedents and products, where procurements and lending were compliant to both the internal and external taxonomies of sustainable banking. Creativity was a standout livewire that kept the Bank’s product offering avant garde, heralding mass digitalisation of exterior channels and automation of internal processes.

The Bank’s resilience was second to none. Being agile to the metamorphic changes in technology, demographics, and preferences of the stakeholders, the Bank adapted nimbly to the exterior environment. As a champion of technology, the Bank continued to strengthen the technological and financial literacy of the customers by assisting them in all banking matters throughout their journeys with the Bank. Trilingual presence in both over-the-counter and call center interfaces was a resounding success in the retention and expansion of the customer base. The Bank was also vigilant on global trends, and kept abreast of the latest initiatives, technologies, disruptions and novelties that shaped the year 2022. While market and credit risks were internalised into the ethos and workmanship of the Bank’s financial dealings, the Bank kept a watchful eye over its financial cushions, always staying adequately stocked with liquidity while maintaining capital buffers, embarking on farsighted provisioning, in a time of financial crises.

The major disruptions of 2022 were of multiple origins. Due to a plurality of factors, including downgrading of the sovereign credit rating, decline in worker remittances, drop in tourist arrivals, diminishing forex reserves, issues related to debt sustainability, and sharp depreciation of the Rupee, amongst others, Sri Lanka was faced with a bleak and austere 2022. In such a milieu, astute and forward-thinking measures were the need of the moment. Resilience was about staying ahead of disruptions, to stay relevant as a modern outfit that is technology-empowered, digitally road-mapped, automation-friendly, and forward-thinking, without losing the fundamental values the now post-centenarian Bank was originally built on.

In order to help identify material topics, adapt the Bank’s strategy to face the “new normal”, and play a significant role in shaping the recovery, the Bank analysed its external environment to identify matters arising from changes that were brought forth by the various developments in the political, economic, social, technological, environmental, and legal/regulatory spheres in the recent past that were relevant to key stakeholder groups, as given below:

Materiality matrix

Management approach

The Bank has the best interest of all the stakeholders at heart and therefore, respects mutuality and shared value when delivering value to and deriving value from them that lead to value creation.

In the process, the Bank manages its material topics through its strategic planning process. This entails assigning responsibility to the heads of the relevant divisions of the Bank and allocating the required resources based on the significance of each material topic towards achieving the aforementioned strategic imperatives. The Bank has embedded goals and targets, where appropriate, into the KPIs of the Key Management Personnel (KMP) and are reviewed on a regular basis, to ensure achievement of its objectives with regard to its material topics.

Many policies have been put in place to guide the staff to conduct activities in a responsible, transparent, and ethical manner in managing the material topics. The Board of Directors has duly adopted these policies, which are reviewed at predetermined intervals to maintain them current to reflect the changing conditions. The Integrated Risk Management Department (IRMD) keeps a track of timely revisions to these policies and reports its observations to the Board Integrated Risk Management Committee (BIRMC).

Where relevant, grievance mechanisms have been established with responsibility assigned to the relevant divisional heads to manage, address and resolve grievances. The Bank’s lending to its customers and dealings with its business partners are screened for social and environmental aspects.

To ensure adherence to internal controls, policies, and procedures established to accomplish the objectives of material topics, internal and external audits and verifications are conducted periodically, and findings are reported to the Board of Directors and/or to the relevant Management Committees for information and corrective action, where necessary.

Overall risk profile of the Bank depicted by its rating and the awards and accolades that the Bank has secured over the years, clearly demonstrate the effectiveness of this management approach.

Material topics, risks, opportunities, how we manage and GRI disclosures

The Bank has identified matters mapped into the blocks relating to the high importance to stakeholder and high and medium importance to the Bank under both opportunities to be capitalised and risks to be managed in the Materiality Matrix shown above as material topics.

Table – 04: Material topics, risks, opportunities, how we manage and GRI disclosures