The importance of saving is ingrained into Sri Lankans at a young age. However, financial literacy is otherwise low in Sri Lanka, except in the Western Province, says Dilshan Wirasekara. Students should be taught financial literacy incrementally in school. However, as they are not, a majority of Sri Lankans reach adulthood only knowing about a bank account. As a result, Sri Lankans are biased towards saving in banks, without realising the variety and utility of other financial services.
The go-to investment vehicle for most Sri Lankans is fixed deposits, which are yielding around 9% interest currently. Another 35% or so of deposits are in even lower-yielding savings and current accounts. Meanwhile, The First Capital Money Market Fund is generating returns of approximately 13%, with the flexibility to withdraw anytime, just like a savings account.
“Some commercial banks aren’t even rated at A-, but people just don’t check this.”
Wirasekara, whose firm managed assets of over Rs8 billion through its wealth management arm in mid-2019, says that the money market fund, which invests in A-rated securities, is safer than even placing fixed deposits in some banks. “Some commercial banks aren’t even rated at A-, but people just don’t check this.”
Investment banks offer services to raise funds, such as corporate debt, public listings and venture capital, which again aren’t as popular as obtaining bank loans. Wirasekara suspects that banks are satisfied with the status quo, as they would lose deposit funding if investment banking gains in popularity.
First Capital provides many investment options for those with varying risk appetites. Greater financial literacy would pave the way for widespread activity and investment banking growth, says Wirasekara, who used to be a commercial banker.
First Capital isn’t sitting idly, but is making investment banking more accessible for the public. The firm will introduce an ATM card for investors in the First Capital Money Market Fund, providing greater peace of mind and facilities for funds withdrawal even outside office hours. Internet and mobile banking too will be expanded further, from the current functions of opening accounts, viewing balances and market data which is available on the First Capital Market App. Wirasekara’s ambition is for accessibility to the whole gamut of services to be easily accessible as traditional banking services over the next ten years.