BANKING SECTOR
Compiled by Yamini Sequeira
PIVOT TO THE DIGITAL AGE
Dhammika Dasa is motivated by the ongoing towards digital embedded services
Q: How do you view the role of digital banking evolving over the next few years, especially in a post-crisis economy?
A: Digital banking is set to play a central role in Sri Lanka’s economic transition towards a digital economy. There is a clear pivot towards digital embedded services across both the public and private sectors.
Many government services are shifting their payment mechanisms online, offering real-time 24/7 access. By enhancing convenience for consumers, these services will serve as catalysts for the broader adoption of digital banking.
Q: How has macroeconomic volatility influenced the pace and priorities of digital transformation?
A: Contrary to expectations, economic volatility has accelerated digitalisation.
Many banks now process 70-80 percent of their transactions digitally while high value transactions are increasingly migrating online. The economic crisis underscored the need for cost-efficient and scalable solutions.
Digitalisation has helped reduce operational costs, minimised revenue leakages associated with cash handling and enabled greater transparency. Considering the regulator’s plan to introduce real-time credit scoring, banks will be able to assess loan eligibility instantly through digital platforms, thereby streamlining the credit process further.
Q: Given the rise of digital wallets and fintech solutions, how can traditional banks stay relevant while adhering to regulatory frameworks?
A: Traditional banks are responding by investing heavily in digital platforms – by developing apps, enabling online account opening and digitising know your customer (KYC) processes.
The way forward lies in collaboration, which will allow traditional institutions to offer cards and mobile banking via platforms of larger banks.
Compliance with centralised frameworks ensures regulatory alignment. Moreover, banks must embrace open application programming interfaces (APIs) and secure integrations that enable fintech style agility within regulatory boundaries.
Q: How can banks strike the right balance between innovation and risk mitigation in a digital first environment?
A: Innovation should not come at the expense of security. Cybersecurity is one of the most critical areas for investment, as online threats such as app based fraud, WhatsApp scams and phishing attacks are becoming increasingly common.
Banks must upgrade their cyber infrastructure while simultaneously educating customers. Stronger encryption, biometric verification, real-time fraud detection tools and continuous monitoring are necessary safeguards.
At the same time, customer trust depends on seamless yet secure digital experiences. The balance lies in building robust backend systems without disrupting front end usability.
Q: Is the banking sector prepared to support a fully cashless economy? And what role does customer behaviour play in shaping the future?
A: The push towards a cashless economy is well underway, supported by the Central Bank of Sri Lanka’s payment road map and national targets for 2030.
However, behavioural inertia remains a barrier, particularly in rural and SME segments, where the adoption of QR codes and digital wallets has been slow despite the necessary infrastructure being in place.
Expanding the merchant base, offering incentives and improving public awareness will be crucial in driving adoption. In addition, digital payments can eliminate practical concerns such as handling and transportation of physical cash.
Q: In what ways can artificial intelligence and machine learning reshape customer engagement and credit risk assessment?
A: AI and machine learning are game changers for the sector. Some institutions are already leveraging AI to automate onboarding processes, verify identities and analyse customer data from various government databases.
In credit evaluation, artificial intelligence can ingest and process large datasets – including utility bills, insurance payments and historical transaction patterns – to assess creditworthiness in real time. This enables banks to provide small ticket loans or credit cards with minimal human intervention.
AI is also being deployed for fraud detection, infrastructure monitoring and predictive maintenance of IT systems. Over time, we could see roles such as chief information officers being replaced by chief AI officers, as artificial intelligence becomes central to decision making.
Q: How can banks leverage data and analytics more effectively to personalise services?
A: Most banks already utilise analytics for targeted marketing, product development and customer engagement. The next phase consists of real-time personalisation based on customer behaviour, preferences and transaction history.
Transparency in data collection and usage, customer consent protocols and strong data governance frameworks are critical.
With proper encryption, banks can harness data responsibly while offering hyper personalised services. As AI tools advance, ethical data science practices will become just as important as technical capabilities.
Q: How can banks expand access to digital financial services among underbanked and rural populations?
A: The key lies in designing solutions tailored to rural contexts – e.g. integrating payments, financing and value chain services. Banks can provide loans based on supply chain data while offering price transparency by providing linkages to marketplaces.
Similarly, in the education sector school specific prepaid cards can be issued to students, which can be topped up remotely by parents. The main challenge for the sector is inclusion and relevance, creating products that resonate with the real needs of users, supported by intuitive interfaces and language accessibility.
