Marketing of Financial Institutions in Eastern Part of Sri Lanka: Emerging Opportunities, Challenges, and Strategies.

1. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 1. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
Marketing of Financial Institutions in Eastern Part of Sri Lanka: Emerging
Opportunities, Challenges, and Strategies.
ALMA.Shameem
Senior Lecturer, Department of Management, Faculty of Mangement and Commerce, South Eastern University of Sri
Lanka.
E- Mail : almashameem@yahoo.com
ABSTRACT
The main aim of the study is to evaluate the emerging opportunities, challenges, and strategies in
marketing financial institutions in the Eastern Sri Lanka. In order to achieve this, twenty financial
institutions were selected from Eastern region. The data were collected through interviews with
the managers and other experts who are dealing with financial institutions. The methodology
adopted for this study is case study research approach for which the data gathered was qualitative.
Findings show that there are several new opportunities and challenges are emerging in day to day
business environment. These are related with technology, changes in life style, new innovative
product developments, new potential investment projects, etc. Further, this study shows that there
is a force to formulate the new strategies among the big competition in the financial industry. It is
clear that the competition is high in this industry in the recent past. Finally this study will
contribute for the decision makers and other policy makers in this field.
Keywords Financial Institution, Opportunities, Challenges, Strategies

2. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 1. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
MARKETING OF FINANCIAL INSTITUTIONS IN EASTERN PART OF SRI
LANKA: EMERGING OPPORTUNITIES, CHALLENGES, AND STRATEGIES
INTRODUCTION
Sri Lanka was experiencing war over the last three decades. Now, Sri Lanka has emerged from
this long civil conflict. This historical period was significantly slowed down the progress of the
country’s business sectors. This has mainly affected the Northern and Eastern regions of Sri
Lanka. Fortunately the war is now over. In post-war Sri Lanka, all regions have the opportunity to
attract more business opportunities, especially in North and East part of Sri Lanka.
At present, the task before the country is to potential restoring peace and security which was
missing for the past three decades, infrastructure development in the war affected regions, which
is may motivate or enhance the business opportunities and attract more investors, regional agro
based production and its development, new emerging SMEs and its promotions, the promotion of
industries, services and local entrepreneurship, private sector development, and promoting sound
financial policies for a stable economic conditions. These are high priority at present in Sri Lanka.
Government of Sri Lanka has created great opportunities for business development in the North
and East region.
The Sri Lankan financial industry was changed during the late 1980s. This has been seriously
impact on post conflict regions. According to history, a very few financial institutions were in
operation with the limited facilities in the region. These financial institutions were belongs to
government sectors. Due to higher risk and uncertainty of business environment has banned the
development of financial institutions in the Eastern part of Sri Lanka. However, the post war
development in different ways such as infrastructure, education, technology with great peace has
created great business opportunities for business sectors. These changes helped for private
financial institutions to expand rapidly while increasing profitability. This paper investigates the
emerging opportunities, challenges, and strategies in marketing financial institutions in Eastern
part of Sri Lanka. Since this region is ethnically, religiously and linguistically mixed, it provides
ideal model and opportunity to investigate the above stated issues.
LITERATURE REVIEW
Financial Institutions in Sri Lanka

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Vol. 1. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
Sri Lanka’s financial sector has experienced significant developments. A financial institution is an
institution that provides financial services for its clients or members (Wikipedia). Probably the
greatest important financial service provided by financial institutions is acting as financial
intermediaries. Most of the financial institutions are regulated by the government in Sri Lanka.
Broadly speaking, financial institutions can be classified in to three major types such as depositary
institutions, contractual institutions, and investment institutions. At present the financial experts
claim that tendency of global homogenization of financial institutions. The homogenization means
that institutions tend to invest in similar areas and have similar investment strategies in the
industry.
Three types of financial institutions are permitted under Banking Act and the Finance Companies
Act to operate in Sri Lanka by the Central Bank of Sri Lanka. They are as follows:
1. Licensed Commercial Banks
2. Registered Finance Companies
3. Licensed Specialized Banks
The current list of banks in Sri Lanka is published by Central Bank of Sri Lanka periodically.
Licensed Commercial Banks
Table1: Name of the Licensed Commercial Banks
Bank of Ceylon Indian Overseas Bank
Citibank N.A. MCB Bank Ltd.
Commercial Bank of Ceylon PLC National Development Bank PLC
Deutsche Bank AG Nations Trust Bank PLC
DFCC Vardhana Bank Ltd. Pan Asia Banking Corporation PLC
Habib Bank Ltd. People's Bank
Hatton National Bank PLC Public Bank Berhad
ICICI Bank Ltd. Sampath Bank PLC
Indian Bank Seylan Bank PLC
Bank of Ceylon Standard Chartered Bank
Citibank N.A. State Bank of India
Commercial Bank of Ceylon PLC The Hongkong and Shanghai Banking
Corporation Ltd.
National Development Bank PLC Union Bank of Colombo Ltd.
Nations Trust Bank PLC Nations Trust Bank PLC

4. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 1. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
Pan Asia Banking Corporation PLC Indian Overseas Bank
National Development Bank PLC MCB Bank Ltd.
(Source: Central bank of Sri Lanka)
Licensed Specialized Banks
Table2: Name of the Licensed Specialized Banks
DFCC Bank Regional Development Bank
Housing Development Finance Corporation
Bank of Sri Lanka
Sanasa Development Bank Ltd.
Lankaputhra Development Bank Ltd. Sri Lanka Savings Bank Ltd.
MBSL Savings Bank Ltd State Mortgage and Investment Bank
National Savings Bank Regional Development Bank
(Source: Central bank of Sri Lanka)
Registered Finance Companies
Table3: Name of the Registered Finance Companies
Abans Financial Services Ltd. L B Finance PLC
Alliance Finance Co. PLC Lanka ORIX Finance Co. Ltd.
Arpico Finance Co. PLC Mercantile Investments Ltd.
AMW Capital Leasing Co. Ltd. Merchant Credit of Sri Lanka Ltd.
Asia Asset Finance Ltd. Nanda Investments Ltd.
Asian Finance Ltd. People’s Leasing Finance PLC
Associated Motor Finance Co. Ltd. People’s Merchant Finance Co. Ltd.
Bartleet Finance Ltd. Senkadagala Finance Co. Ltd
Bimputh Lanka Investments Ltd. Singer Finance (Lanka) Ltd.
Capital Reach Leasing PLC Sinhaputhra Finance PLC
Central Finance Co. PLC Swarnamahal Financial Services Ltd.
Central Investments Finance Ltd. The Finance Co. PLC
Ceylinco Investments Realty Ltd. The Finance Guarantee Co. Ltd.
Chilaw Finance Ltd. The Multi Finance Co. Ltd.
Citizens Development Business Finance PLC Trade Finance Investments Ltd.
Commercial Credit Ltd. Vallibel Finance PLC
Edirisinghe Trust Investments Ltd. Industrial Finance Ltd.
Grameen Micro Credit Co. Ltd. Kanrich Finance Ltd.
(Source: Central bank of Sri Lanka)
Marketing Issues of Financial Institutions
The American Marketing Association (AMA) is defined the term marketing as the activity, set of
institutions, and processes for creating, communicating, delivering, and exchanging offerings that

5. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 1. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
have value for customers, clients, partners, and society at large. Dwivedi, R. (2007) explained
that finance functions are important but not as important as the marketing functions.
According to scholars arguments the resistance between the marketing and finance functions
would be harmful to marketing of financial institution. Because it is the combined function
directed towards the quality service to satisfy customer’s financial needs and wants, more
effectively than its industrial competition maintenance in view of the organizational profit.
Financial institution need to market their services. Marketing is a critical way for financial
institutions to communicate about product and services, and its benefits. The purpose of this effort
is to create public images for their institutions. According to financial analyst, one of the best
ways for marketing financial institutions is to use language and images that create the greatest
impression about the institution. At the same time, marketing communication messages should be
different from the campaigns used by other financial institutions.According to International
Journal of Management Research the finance objectives like value maximization to shareholders
are essential parts of any new strategy adopted by the organization.
Dixit, V.C. (2004) depicts that a successful marketing management and its effective operations,
there should be a high attention on identify the customer needs by way of designing new products
to suit the customers. In 7Ps aspects the staff should be well equipped with adequate knowledge to
fulfil the customer’s needs. The management of the organization should adopt long-term
sustainable strategies to lead the entire organization into a customer-oriented one among the high
competition in the financial market.
Jain, A. (2007) concludes that marketer has to understand various marketing environment.
Because every marketing environment differs from place to place as well as nation to nation than
that of the same country state. Further Malik (1996) explained the importance of human capital for
successful marketing. He described the various aspects of human resources management in
financial sector.
Thomas L. Wheelen, J. David Hunger and Kathryn E. Wheelen (2012) has defined the term
Strategic management is a set of managerial decisions and actions that determines the long run
performance of a corporation. It includes environmental scanning (both external and internal),
strategy formulation (strategic or long-range planning), strategy implementation, and evaluation
and control. The study of strategic management, therefore, emphasizes the monitoring and

6. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 1. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
evaluating of external opportunities and threats in light of a corporation’s strengths and
weaknesses. Originally called business policy, strategic management incorporates such topics as
strategic planning, environmental scanning, and industry analysis.
Sreedhar (1991) have dealt with marketing in commercial banks. They have emphasized
motivation research, marketing research and promotional aspects in marketing of services
and suggested to improve the marketing strategies to cope with the changing environment.
OBJECTIVES OF THE STUDY
The main objective of this study is to find out the emerging opportunities, challenges, and
strategies in marketing financial institutions in Eastern part of Sri Lanka. Further the aim of the
study is to find out the present financial industrial structure and potential trend in Eastern part of
Sri Lanka.
METHODOLOGY
Qualitative method was adapted to study the emerging opportunities, challenges, and strategies in
marketing financial institutions in Eastern part of Sri Lanka. It is one of the important methods to
study on this type of issues. Based on this method the research tools were selected by the
researcher which was highly matches with the objectives of this study.
In order to meet the objectives of the study, data were collected from secondary and primary. This
study was conducted in the Eastern region of Sri Lanka. Data were obtained from ten key
informants using in depth interviews and five focus group discussions with well defined interview
questions. Further the observation has been made in this region from war ended period. The
sampling techniques was random sampling with the purpose is to obtain a depth understanding of
the issue. Twenty financial institutions were selected for this study as a sample from the available
institutions. Collected data were properly recorded and analysed using appropriately.
RESULTS AND DISCUSSION
The following results were obtanied from the data anlaysis:

7. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 1. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
Opportunities
• Local tourism showing a positive trend: Other than the well established companies, local
entrepreneurs are also interested in investing in tourism. As such the Banks have the
opportunity to finance to construct new hotels and rest as well as to purchase relevant
vehicles for their business operation.
• Development of transport: In the post conflict situation the transport and the relevant
infrastructure facilities are being developed in an excellent way. That created new supply
channels to the local entrepreneurs particularly farmers. As such the demand for
commercial vehicles and agriculture vehicles have gone up during the last couple of years.
As per the information given by the Regional Manager of DIMO , they have sold more the
700 hundred commercial vehicles merely in the year of 2013.
• Demand for micro finance: Trend of the people to engage in self-employment has created
demand for micro finance in the area. As such new finance companies have recently
opened their Branches merely targeting the Micro Finance.
• Development in fishing industry: After the conflict situation the fishermen in the area are
enjoying more freedom and relaxation in the Eastern Sea. As such the trend for purchasing
new deep sea boats has gone up particularly in some areas. Further the demand for coastal
fishing boat and engines is also showing a positive trend. Apart from that the fishermen
now has started to engaged in fish transport also where it was earlier handle by the whole
sellers . That creates more finance opportunities for the Banks.
• Development in paddy cultivation - Rice millers: Post conflict situation has granted an
opportunity to utilize the unutilized paddy lands. That increased the paddy production of
the area during last couple of years. That created the opportunity for the paddy processors
(Mills). The rice millers are now intends to go for new modern machineries in order to face
the competition. This gives the financing opportunities to the Banks. E.g Color sorter,
Polisher and Dryers.
• Change in the life style of the People: The mind set and the life style of the people have
drastically changed for last five years. Now the positive trend of going for an own family

8. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 1. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
car/ vehicle created more opportunities for vehicle vendors and leasing business. The
luxury vehicle vendors have capitalized this opportunity with the support of the Finance
companies in excellent manner. More than twelve vehicle yards have been opened during
this period in Eastern region.
Challenges
• Very high competition: Since more than 40 financial institutions are operated in the area,
the competition among them is very high. The companies are providing the services at the
door step of the clients with high flexibility. Further they provide attractive promotional
offers even and the clients also now have a lot of option to choice.
• Recovery issues: Since the companies have to operate in a highly competitive
environment, they fail to analyze the credit worthiness of the clients properly. As such the
NPA rates of the institutions are also gone up commonly. Further the leasing companies
are now opening new vehicle yards to park the re-possessed vehicle in the region.
• Customer’s education level is high: Now the clients are very keen in analyzing the
products offered by the financial institutions. They compare and take decisions.
• Threats from Islamic finance: In the areas where the Muslim density is high, the demand
for Islamic Finance is very high. The other financial institutions face difficulties in
marketing their products in such areas. As such now the other financial institutions also
have started to open their own Islamic Finance windows in the areas.
E.g. Bank of Ceylon Islamic Unit
• Emergence of new and small scale companies with low collateral requirements:
There was a time there were a lot of procedures the clients wanted to meet to obtain a loan
and other credit facilities. But with the emergence of new small finance companies, the
procedures were relaxed and the clients got the opportunities to obtain credit facilities
particularly Micro Finance with minimal collateral requirements.
Strategies
• Very close customer relationship: Now the clients have become as god and the companies
intends to maintain the relationship beyond the official limits. With this in mind few new products

9. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 1. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
also have been introduced. Further the companies arrange social function relating the regional
values to make bond with the clients.
• Innovative products: To attract the clients the companies introduce attractive products
periodically. E.g. Foreign remittances can be withdrawn even from the ATM.
• Price discrimination: The Banks use this strategy to attract or tackle the clients of other Banks.
They match the rates of the competitors in order to canvass the clients. Especially private Banks
use this strategy and they offer different rates for different clients. E.g. leasing rates.
• Products targeting aging population: Now the Banks are targeting aging population by offer
high rates for their deposits and special loan schemes. Recently a bank is aggressively offer loans
for pensioners in the area.
• Woman and rural marketing: Now the Companies are intending to target rural woman societies
in order to attract the society deposits and for micro finance. Since the studies are showing that the
NPA rates of woman borrowers are low, the Banks and other financial institutions are interested
on that.
• Islamic Finance Units: The Banks and other financial institutions are now opening their Islamic
financing unit in the Muslim regions in order to penetrate the market or retain the market share.
Since the Muslim community especially woman and those who are not engaged in Trading are
merely move towards the Islamic fiancé concept, the companies have to keep this trend in mind in
operating in the area.
CONCLUSION
The aim of this study is to evaluate the emerging opportunities, challenges, and strategies in
marketing financial institutions in the Eastern province which was severally affected province
during the conflict period in Sri Lanka. In order to achieve this, financial institutions were
selected from Eastern region. Findings show that there are several new opportunities and
challenges are emerging in day to day business environment in this region. These are related with
technology, changes in life style, new innovative product developments, new potential investment
projects, etc. Further, this study shows that there is a force to formulate the new strategies among
the big competition in the financial industry. It is clear that the competition is high in this industry

10. Proceeding - Kuala Lumpur International Business, Economics and Law Conference 4 (KLIBEL4)
Vol. 1. 31 May – 1 June 2014. Hotel Putra, Kuala Lumpur, Malaysia. ISBN 978-967-11350-3-7
in the recent past. Finally this study will contribute for the decision makers and other policy
makers in this field. Due to the present peace situation, the business is booming ever before.
REFERENCES
Dixit, V.C. (2004), “Marketing Bank Products”, IBA Bulleti.
Dwivedi, R. (2007), “Managing Marketing-Finance Interface”, Journal of Commerce and Trade,
Vol. No. 2 (Oct.), p. 32
https://www.ama.org/Pages/default.aspx
https://www.cbsl.gov.lk
https://www.wikipedia.org/wiki/Financial_institution
Jain,A. (2007), “Managerial Role in International Marketing Strategies”, Journal of
Commerce and Trade, Vol. 2, No. 2 (Oct.), p. 29
Malik, S.C. (1996), “Building Human Capital for Banking”, Vichaar, Vol. 16, Issue 4, (Oct.)
Sreedhar, G., “Marketing-Style of Indian Banks”, The Banker, New Delhi, (Feb.)
Thomas L. Wheelen, J. David Hunger , Kathryn E. Wheelen (2012), Strategic Management and
Business Policy: Toward Global Sustaınabılıty, Prentice Hall.