Highlight on Savings: Banking on the Future

Vital Savings Statistics (June 2007)

Total volume deposits	US$1,416Mn
Total number of fixed deposit accounts	2.5Mn
Total volume of regular savings accounts	US$591Mn
Total number of regular savings accounts	2.2Mn
Total volume of minor's (under 18) savings	US$35.3Mn
Total number of School Banking Units	150
Loan portfolio($)	US$1,243Mn
Source: Chandula Abeywickrema, based on June 2007 Interim Report

Hatton National Bank (HNB) is a leading commercial bank in Sri Lanka. The bank’s vision is to offer targeted savings services to all segments of Sri Lankan society. Chandula Abeywickrema is Deputy General Manager for Hatton National Bank, and is the current Chairman of Banking With The Poor Network. In this interview conducted by CGAP's Savings Information Resource Center (SIRC), Chandula Abeywickrema talks about the HNB’s school banking program - an innovative way of encouraging children to save.

SIRC: Why did Hatton National Bank launch school banking products?

Abeywickrema: HNB's management noticed that Sri Lanka had low formal savings rates compared to other countries in South Asia. We believed that the bank had a responsibility to help people save. We started the school banking program as a "social corporate responsibility" activity, but we soon found out this worked very well. The program creates a sentimental attachment to our bank and young clients tend to stay loyal to us when they grow up. For example, one of our important clients today is a successful businessman who started banking with us a young boy.

SIRC: How does this school banking program work?

A group of student managers on their school premises

Abeywickrema: The program allows school children aged from 6 to 18 to save money in a formal bank account by bringing their savings to school on a regular basis. We use school infrastructure to deliver savings services in a cost effective way. Student Banking Units, composed of five student volunteers whom we train, manage the program. HNB has trained and certified approximately 10,000 students.  Through the Students Managers program the bank also identifies talented graduates to recruit as HNB employees.

More and more schools are approaching us to start school banking programs with them. They believe our services are useful to their students. My personal estimation is that 70-80% of students in the program save for higher education, while many of the remaining students use their savings to start small businesses when they leave school. We are committed to meeting the increasing school demand, and are keen to explore technology-based solutions.

SIRC: What are Hatton National Bank's other innovative savings products?

The bank's mascot, encouraging children to save

Abeywickrema: Based on the success of the school banking products, we have launched several products for children—most of them are long term products remunerated with a 5.5% interest. Children can access their savings when they turn 18. We distribute elephant-shaped tills to young children to encourage them to save regularly at home, while we open accounts for them at the bank. We have also just developed an infant savings product that is marketed in maternities. In Sri Lanka, it is considered a good omen to offer gifts as soon as a baby is born; this product encourages family to place money directly in the child's account instead of offering gold or jewelry.

All together, we have more than 400,000 children's savings accounts with a balance of over US$35 million. On top of being an important source of funding, the school banking program and the children’s saving accounts have proven to be effective marketing tools. Many children’s products attract parents and even grandparents into banking relationships with us.

At the other end of the life cycle, we have recently developed a senior citizen banking product. We offer them 1% extra interest rate. This older clientele also particularly appreciates the health insurance product we offer, by which they can receive reimbursement of hospitalization expenses in one of our eight partner hospitals. For the moment, this product is not profitable per se: we cross-subsidize it with other, more profitable, products.

We developed all these targeted savings programs because our bank wants to cover all segments of society with useful products. At HNB, we believe in creating a savings habit: we want people to start saving small sums and to gradually reach higher amounts. We know that small deposits create a continuous inflow of funds for the bank.

HNB’s targeted savings programs are also giving a very positive image of the bank—and we are proud of offering valuable saving services to our fellow citizens.

A more extensive interview with Chandula Abeywickrema is available on the Savings Information Resource Center.