1. INTRODUCTION

1.1 History of Banking Industry in Sri Lanka

The story of Sri Lanka's banking sector is entwined with the nation's post-independence struggles, colonial heritage, and economic growth. Sri Lanka's contemporary banking history began during the colonial era, when the early financial environment was shaped by British influence. During this time, banks serving the requirements of plantation owners, trade, and colonial administration were mainly the Bank of Ceylon (1939) and the Chartered Bank (later renamed Standard Chartered).

After Sri Lanka gained independence from British colonial authority in 1948, the newly established government set out to strengthen the country's economy. The nationalization of significant institutions like the Bank of Ceylon and the founding of the People's Bank in 1961 were the results of the state's crucial influence on the banking industry. The objectives of these programmes were to further state-led economic policy, financial inclusion, and rural development.

The Central Bank of Sri Lanka became the regulatory body in charge of the banking sector after it was founded in 1950. It created monetary policy, oversaw bank regulation, and promoted economic expansion. Alongside state-owned institutions, private commercial banks also emerged, expanding the banking sector and broadening the financial environment.

Sri Lanka started economic liberalization measures in the late 1970s and early 1980s, allowing private and international investment in the banking sector. During this time, new private commercial banks were established and foreign banks entered the market, which encouraged competition and innovation in the sector.

However, political unrest and internal strife hampered Sri Lanka's economic development. The government's protracted civil war with the insurgent Tamil Tigers (LTTE) led to serious problems for the banking industry that persisted until 2009. The economy was stretched by financial mismanagement and the allocation of funds to conflict resolution, which had an effect on the stability and expansion of banks.

The banking sector in Sri Lanka has adapted to modernization and digital transformation in spite of these obstacles. Banks embraced technology in order to increase productivity, broaden their offerings, and improve client satisfaction. As a result of shifting consumer tastes and the need to promote financial inclusion, mobile banking, online banking, and electronic payment systems have become increasingly popular.

The Central Bank of Sri Lanka strengthened the banking industry and protected the stability of the financial system by enacting regulatory changes. Among the actions taken were improving risk management procedures, putting Basel III standards into effect, and encouraging openness and corporate governance.

The banking sector in Sri Lanka has had difficulties recently, including non-performing loans, cybersecurity risks, and the requirement for infrastructural expansion. Nonetheless, the nation presents prospects for advancement, such as broadening the reach of financial services to marginalized regions, endorsing sustainable finance, and nurturing fintech innovation.

All things considered, Sri Lanka's banking sector's history is proof of its ability to adapt, persevere, and change in response to political, technological, and economic shifts. It depicts the path taken by the nation to achieve inclusive growth, sustainable development, and financial stability.

1.2 Benefits of Banking

Modern economies are based on banking, which offers a multitude of advantages to people, companies, and society at large. These advantages include convenience, economic growth, financial security, and credit availability.

Primarily, banking provides a safe and secure setting for monetary storage. Bank deposits are safeguarded against loss, theft, and damage by a number of procedures, including strong security protocols and deposit insurance programmes. Individuals can rest easy knowing that their hard-earned money is protected thanks to this promise of safety.

Moreover, banking offers unmatched accessibility and ease. The abundance of banking channels, including ATMs, internet platforms, mobile apps, and branches, allows users to handle their money from anywhere at any time. Banking services, which ease daily financial activities, are available at the press of a button and include checking account balances, moving funds, and paying bills.

The ability of banking to facilitate payments is one of its many important benefits. In order to facilitate smooth and effective transactions, banks provide a range of payment options, such as checks, debit cards, credit cards, and electronic transfers. This lowers the requirement for cash while improving financial management by offering an unambiguous record of transactions.

Furthermore, banks are essential for promoting investment and savings options. People can gradually increase their wealth through mutual funds, savings accounts, term deposits, and other investment products by receiving returns and interest. With the use of these financial tools, people can make plans for the future, including retirement, education, and other financial objectives.

Another important advantage of banking is having access to credit. Banks enable people and companies to finance purchases, investments, and operations by offering loans and credit lines. Access to credit drives economic activity and opportunity, whether it's through a mortgage to purchase a home, a business loan to expand operations, or a personal loan to pay for unforeseen needs.

In addition, banks provide their clients with a variety of financial planning and advising services to aid in efficient money management. These services, which range from risk management and investment advising to retirement planning and budgeting, enable people to make wise financial decisions and reach their long-term objectives.

In the context of global trade and business, banks are essential for both transaction facilitation and risk mitigation. Banks facilitate cross-border trade by offering trade finance services like currency exchange, documentary collections, and letters of credit, which help companies grow internationally and promote economic integration.

Strong banking is a prerequisite for development and expansion of the economy. Banks manage capital effectively, direct savings towards profitable ventures, and offer funding for infrastructural, innovative, and entrepreneurial endeavours. Banking promotes general prosperity and well-being by stimulating economic activity and employment creation.

Additionally, banking encourages financial inclusion by giving marginalized and underprivileged groups access to financial services. By means of programmes like microfinance, mobile banking, and branch networks, banks enable people and communities to engage with the formal financial system, therefore mitigating poverty and inequality.

1.3 Employee Retention Management in Banking Industry

A nation's banking industry is essential to its economic growth. It serves as a risk manager, an investment activity booster, a savings mobilizer, and a financial market stabilizer. 

This industry is wholly people-focused, and its workforce is in charge of advancing the business strategy of offering clients excellent counsel and closing deals on goods. Consequently, the efficacy of an organization's workforce is primarily dependent on the job happiness of its workforce. The work itself, the compensation, prospects for growth, coworkers, and supervision are some of the variables that affect this, but overall, a high degree of job satisfaction is virtually always most closely connected with work enjoyment. 

With liberalization and globalization, new foreign banking companies are entering into the world market resulting in an increase in the competition. 

In order to thrive in this fiercely competitive landscape, a corporation must attain substantial earnings and a substantial market share. Companies are under pressure to set extremely high and unachievable goals for their workers, and in order to meet these goals, workers are being put under pressure to put in more overtime and take fewer vacation days and breaks. Employees who have lengthy workdays and excessive workloads experience worry and stress, which negatively impacts their health, relationships with family and friends, and performance at work. Each of these elements eventually lowers the rate of retention and the degree of job satisfaction among employees. These worries thus represent a significant social issue. Examining the impact of motivating variables on entry-level sales staff retention in banks is the aim of this study.

1.3.1 The Level of Employee Retention in Banking Companies

Name of company	Year	No of total employees	No of emp remaining	No of emp left out	Turnover rate
NTB	2022	1,988	1,757	231	8.6%
	2023	2,479	2,234	245	10%
NDB	2022	2,734	2,412	322	8.4%
	2023	2,949	2,651	298	9.8%
NSB	2022	3,988	3,532	456	8.7%
	2023	4,641	4,212	429	10.8%
Sampath	2022	4,179	3,718	461	9%
	2023	3,948	3,574	374	10.5%
Union	2022	1,035	914	121	8.5%
	2023	1,164	1,030	134	8.6%

This is the data taken from the annual report.

References:

Bank History | Central Bank of Sri Lanka [online], (no date-c). Central Bank of Sri Lanka. [Viewed 16 April 2024]. Available from: https://www.cbsl.gov.lk/en/about/about-the-bank/bank-history

The benefits of using a bank (2024) INTRUST Bank. Available at: https://www.intrustbank.com/article/the-benefits-of-using-a-bank (Accessed: 17 April 2024).