Sri Lanka’s march toward digital banking has gained headlines and praise abroad, but for many citizens, especially outside major cities, the promise remains out of reach. Despite some modern mobile apps and online services, everyday banking still often involves paperwork, long waits and reliance on outdated systems. This gap between hype and real digital inclusion is driving debate among customers, innovators, bankers and policymakers about how the country’s financial system must evolve.
At its heart, the issue is not just about modern tools, but about making everyday financial services easy, affordable and accessible for all Sri Lankans, whether they live in Colombo or a rural village. As experts and users say, digital banking can expand opportunities and lift millions into the formal financial system, but only if real obstacles are understood and resolved.
Paperwork and Legacy Systems Undermine Digital Progress
For many Sri Lankan customers, a painful irony has emerged: banks advertising digital services often still force them into traditional, paper‑based processes.
A popular science writer’s recent social media post went viral after he shared frustration with a leading private bank that insisted he fill out physical forms just to add an existing account to his portfolio, despite his information already being held digitally with the bank. He even requested a fillable PDF, but was denied. That experience sparked criticism that digitalisation in the banking sector has been largely superficial.
Experts say this happens because many banks still rely on older IT infrastructure and manual processes, making it difficult to fully embrace digital workflows such as automatic account updates or electronic document submissions. These legacy systems, while familiar, slow down genuine digital inclusion and frustrate customers accustomed to seamless online experiences elsewhere.
The Promise and Problem of Digitalisation
Digital transformation has two parts: digitisation and digitalisation. Digitisation means converting physical documents and services into digital formats, such as storing customer information in servers. That step has taken place in many Sri Lankan banks.
True digitalisation, however, uses digital information to automate decisions, streamline processes, and deliver services efficiently without human intervention. This could mean a customer opening a second account without re‑submitting previously shared details or accessing financial advice through digital channels. Critics argue Sri Lanka’s banks have barely scratched this deeper layer.
Experts say digitalisation can unlock major productivity gains:
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Automated account processes reduce in‑branch visits and long queues.
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Data analysis can tailor products like loans to individual needs.
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Real‑time services keep customers connected with their finances anywhere.
However, these benefits are uneven and available mostly to urban, tech‑savvy users with reliable internet access.
Open Banking: Opportunity Waiting to Be Tapped
In many advanced markets, banks have opened their data safely to third‑party developers through Application Programming Interfaces (APIs), enabling shared services like account aggregation, budgeting tools and personalised financial products without compromising security. This is known as open banking and has already been adopted in regions such as the UK, EU, Singapore and Australia.
Sri Lanka has yet to harness open banking fully, despite some private banks experimenting with limited API platforms. These APIs can sell products, compare rates or automate financial tasks, but many banks remain hesitant.
One young Sri Lankan innovator developed an API platform to help customers compare products across banks, lowering the time and cost involved in searching for better deposit rates or loan terms. He explained that such a platform could save consumers time, cut bank advertising costs, and boost competition. But traditional banks did not adopt the idea, and the entrepreneur eventually moved overseas to pursue his skills.
This story shines a light on a broader challenge: innovations that could make banking more inclusive often fail without institutional and regulatory support.
Digital Banking Growth and Early Successes
Not all is bleak. Some Sri Lankan banks are making strong progress.
For example, Commercial Bank of Ceylon launched a trilingual digital banking app called Flash, available in Sinhala, Tamil and English. This tool lets users open accounts from their phones, manage savings, pay bills and even invest, without visiting branches. The multilingual feature aims to boost digital inclusion for rural and underbanked communities whose first language may not be English.
Separately, digital banking innovation has earned recognition for Sri Lankan institutions. A major international magazine recently named the Commercial Bank as the Best Bank for Digital Solutions in Sri Lanka, highlighting strong mobile app engagement and digital payment app adoption.
Academic studies also show that information and communication technology can improve rural bank access, though challenges remain, including low awareness and distrust of digital tools among less digitised populations.
Barriers Beyond Technology
Digital inclusion is not just about apps. Broader socioeconomic issues also play a role. A recent development report pointed out that digital literacy in Sri Lanka is below full participation, with only about 63 percent of people comfortable using digital tools, even though overall literacy is much higher. This makes online and mobile banking less accessible for older adults or those in remote areas.
Female participation in digital finance sometimes lags behind due to gender norms and limited access to devices, further widening inclusion gaps. Other studies show that trust and security concerns reduce uptake of digital financial services in rural populations.
Infrastructure also matters. In many rural communities, inconsistent internet connectivity makes online banking unreliable. Even where mobile penetration is high, users may avoid digital services due to fear of fraud, lack of digital skills, or unfamiliar interfaces.
The Role of Regulation and Policy
To make digital banking more inclusive, Sri Lanka’s regulators and policymakers have critical roles. Abroad, central banks and governments have used financial inclusion frameworks to encourage technology, promote secure digital IDs, and require open standards that benefit consumers. Productive digital ecosystems support not just convenience but economic justice and poverty reduction by bringing more people into the formal financial system.
Creating a regulatory environment that supports open banking, safeguards data privacy, and incentivises digital literacy programs could help Sri Lanka’s banks move beyond marketing slogans and deliver real benefits. Integration with national digital identity systems and shared platforms for credit scoring could help lenders better assess risk and offer products to new segments.
Bridging the Gap Between Promise and Reality
The contrast is stark: while digital banking continues to grow in many countries, offering inclusive services to previously unbanked citizens, Sri Lanka’s digital financial ecosystem remains uneven. Without broader adoption of modern standards, deeper integration of data, and targeted policies to support learners and rural users, the digital divide will persist.
Financial services are not just business products; they are tools that can boost economic opportunity, create savings habits, enhance investment and support entrepreneurship. But for these benefits to spread, banks must shift from digital hype to digital inclusion through tangible, user‑centric innovation.
