Compiled by Lourdes Abeyeratne
FINANCE IN A TECH WORLD
Kanishka Weeramunda explains how fintech disrupts the financial sector
Q: In what ways has fintech impacted the local financial services industry?
A: Better client service, enhanced financial security, and more opportunities for individuals and businesses are among the fruits of fintech innovation.
An example of the impact of fintech is positive changes in private data protection and customer experience. Other changes include reduced transaction fees, improved transparency and a lower risk of error, which has been achieved through blockchain deployment.
A trend that deserves special attention is omni-channel banking, which enables users to transact in any environment including web platforms, applications and social networks.
Q: Has the local fintech sector’s growth matched that of other countries in the region?
A: A growing number of fintech related businesses are emerging in Asia, reflecting an increasing interest in the global boom.
As for Sri Lanka, its growth isn’t satisfactory compared to the nation’s regional peers.
According to PricewaterhouseCoopers, China and India are spearheading advancements that are shaping global trends in this sector. Fintech investments in China alone outweigh those in the rest of the Asia-Pacific region. The robust growth of India’s BharatQR and PayTM has continued. Similarly, Singapore and Hong Kong are far more advanced in fintech.
In comparison, Sri Lanka is still in the early stages of fintech development.
Q: How could the sector contribute to Sri Lanka’s economic growth?
A: Because of fintech, payment, investment and lending innovations have been digitalised. Financial services are much more accessible, affordable and easily usable – and this has a great economic impact.
Especially in the payments and settlements domain, cash payments come with associated costs. Fintech companies are trying to innovate, and eliminate the cost of cash and cheque transactions – this would lead to cost savings, tech adoption, and quicker transaction and settlement times.
By embracing these innovations, we’re driving disruption in the financial services landscape and boosting the digital conversion of financial services.
Q: Which technologies could be adopted to drive growth in the local sector?
A: These days, the highlight is ‘QR code based payments’ in China and other nations in the region, which is yet to be adopted properly in Sri Lanka. Moreover, a growing number of Asian fintech startups are beginning to focus on blockchain, cybersecurity and AI.
Blockchain technology is actively used to reduce overhead costs associated with verifying authenticity. It can also help investment banks reduce expenses by more than 30 percent in areas such as finance reporting, compliance, and centralised and business operations.
Q: Is there sufficient collaboration between organisations to cater to market needs?
A: Yes indeed. A couple of fintech related forums are trying to work together. The Central Bank of Sri Lanka is also providing support, which helped in appointing a fintech committee, as well as a sandbox committee, to encourage fintech innovations and cut through the red tape.
We also collaborate with regional fintech associations by way of knowledge sharing and looking at how Sri Lanka can develop cross border payment facilities.
Q: Has consumer behaviour impacted the sector’s growth?
A: Yes. Fintech technologies have enabled consumers to use financial services that are easily accessible on mobile devices, leading to fewer interactions with commercial providers as physically visiting banks or other financial institutions is no longer required. We observe an increase in e-commerce especially local commerce wherein people use cards to make payments. Transferring money using these apps or making payments through internet payment gateways (IPGs) saves consumers time and effort.
With the benefits that fintech brings to the table, the sector’s growth is certain.
Q: And how do you expect the sector to develop in the medium and long terms?
A: In the medium term, the sector will mainly look at transaction based payments and settlements.
In the long run, the focus will more or less be on contract based settlements in which the smart contract will come into play. In the case of short-term settlements, this will be the most prominent solution.
Contractual payments, recurring payments, insurance related payments and claims settlements will be dominant while not only will customers pay electronically but companies would settle digitally. We’re also looking at cross border payments with cross currency settlements.