Sri Lanka’s Fintech Revolution: Paving the Way forEconomic Growth and Financial Inclusion A Discussion with Perera, Deputy CEO - LankaPay

Sri Lanka, a nation characterized by a sizeable rural population and evolving economic

landscape, stands on the cusp of a digital revolution in financial services. Despite

challenges typical of developing economies, ongoing efforts led by the public and private

sectors are actively shaping an inclusive digital payment ecosystem. Mr. Dinuka Perera,

offers a detailed perspective into the strategies, challenges, and future outlook of digital

financial inclusion in the country.

Understanding the Digital Divide: Rural Realities and National Strategy.

With approximately 80% of Sri Lanka’s citizens living in rural areas, geographic and

infrastructural disparities profoundly influence digital adoption. While urban centere such

as Colombo exhibit significant digital payment penetration, rural regions face constraints

related to internet connectivity, digital literacy, and trust in technology. However, Sri Lanka

benefits from a unique advantage: a surprisingly robust banking penetration with

approximately 21 million bank accounts in a population of around 22 million, indicating

multiple accounts per individual in many cases. This positions Sri Lanka as a "well-banked"

country, laying a vital groundwork for financial digitization.

The country's digital payment endeavors are guided by the Central Bank. LankaPay along

with financial institutions and the government institutions play a pivotal role in supporting

these initiatives which stimulate both financial inclusivity and transition from cash to digital

payments.

Mobile-First Approach: Bridging Connectivity Gaps

Recognizing Sri Lanka’s varied technological landscape the Deputy Chief Executive Officer

underscores a “mobile- first" philosophy driving product development. Smartphones have

become ubiquitous, even in remote regions, far surpassing the reach of computers or

laptops. While network connectivity issues remain an obstacle, continual infrastructure

enhancements are expected to improve access incrementally. Mobile-friendly financial applications thus stand as the backbone for increasing accessibility to digital payments. By accommodating devices that are widely owned in rural areas, these solutions aim to overcome the physical and economic barriers that previously hindered formal financial service outreach.

Overcoming Barriers: Literacy, Trust, and Fraud

One of the most formidable challenges in digital payment adoption remains the dual issues

of digital and financial literacy. Estimates from national statistics indicate that 63.5% of Sri

Lankans aged 5-69 years are classified as digitally literate. However, the financial literacy of

the Sri Lankans can be further improved, especially in terms of how they invest in

legitimate financial institutions and refrain from falling prey to financial fraud and scams.

Despite Sri Lanka experiencing fewer digital scams than many other countries, incidents

nevertheless propagate fear and distrust. This phenomenon is especially visible among older generations, who often prefer traditional banking methods, citing safety concerns. Mr

Dinuka highlights that financial fraudsters exploit this fear and attempt social engineering

attacks such as coaxing individuals to share one-time passwords (OTP), undermining

security efforts. To combat this, industry and regulatory authorities engage in

comprehensive awareness campaigns, promoting secure usage practices and financial education. These initiatives include mandatory OTP use, strong advisories against sharing security credentials, and educational content disseminated via social media. Building trust through both technology and community engagement remains a paramount priority.

LankaPay and Gov Pay: Digitizing Public Sector Transactions

A major milestone in Sri Lanka’s digital payment ecosystem is the integration between

LankaPay & GovPay. The alignment enables numerous government. entities (currently over

160 and expected to exceed 500) to receive real-time online payments, vastly simplifying

tax, fee, and service payments that previously required physical visits.

This initiative not only provides convenience for citizens but also improves government

efficiency by reducing the reliance on cash handling, reconciliation challenges, and cheque

processing. Implementations include municipal tax collections, licensing fees, and public

service payments, contributing to greater transparency and timeliness in public finance.

Future Workforce and Fintech Trends: Embracing AI and Creativity

Looking forward, the Deputy Chief Executive Officer reflects on the evolving demands of the

fintech workforce in the face of emerging technologies such as artificial intelligence (AI).

Traditional accounting and finance roles are increasingly susceptible to automation,

prompting a shift in professional skills towards areas that require creative problem-solving

and human-centric insights.

Security emerges as a particularly critical area where human expertise remains

indispensable, with an acute shortage of cybersecurity talent highlighted. He advises

Young professionals should seek educational paths that emphasize creativity, technological

fluency, and security, as digital financial technology continues to reshape the economic

landscape.

Cultural and Linguistic Dimensions of Digital Adoption

Sri Lanka's rich linguistic and cultural diversity impacts digital service design and adoption.

Surveys reveal that 70% of users prefer navigating digital interfaces in their native

languages (Sinhala or Tamil) rather than English. However, most banking apps and online

services prioritize English interfaces, especially in urban-centered development. This

discrepancy contributes to hesitation among rural populations and non-English speakers to

fully embrace digital payments. Expanding native language support in digital platforms is thus regarded as an essential step for inclusivity, empowering users with confidence and reducing barriers rooted in language and comprehension.

Economic Volatility and Resilience: The Impact of COVID-19 and Fuel Crises

The interview further highlights how recent economic upheavals, including the COVID-19

pandemic and fuel price volatility, tested and reinforced the necessity of dependable digital

payment infrastructure. During lockdowns, the company's payments switch operated 24/7

to facilitate digital transactions amid movement restrictions, enabling continued access to

funds and payments when physical banking was largely inaccessible.

Nevertheless, post-lockdown reversal to cash-based transactions demonstrates the fragility

of behavioral shifts without sustained incentives. Unlike India’s demonetization-driven

digital push, Sri Lanka witnessed a temporary spike followed by a reversion to traditional

cash usage, underscoring the complex interplay of convenience, habit, and trust in financial

behaviours.

Ongoing Challenges and Strategic Priorities

Despite progress, the digital payments ecosystem faces critical ongoing challenges,

including:

•Maintaining and enhancing consumer trust amid fraud incidents.

•Retaining specialized talent within the sector, challenged by migration and competition.

•Accelerating the onboarding of government organizations to digital payment platforms.

•Driving digital payment adoption through incentives and policies, such as discounted fees

for digital transactions and surcharges for cash payments.

•Encouraging adoption through mandated use cases, as seen in student fee payments and

fuel passes, to habituate users to digital norms.