Aligning banking tech to growth: Inside HNB’s emerging innovation ecosystem

HNB Managing Director/CEO Damith Pallewatte	HNB Executive Vice President /Chief Innovation Officer Chandima Cooray

Innovation thrives on collaboration, creativity, and experimentation. Yet in tightly regulated industries such as banking, innovation operates under fundamental constraints.

Managing the tension between delivering services with the speed and accessibility customers demand while maintaining stability and regulatory compliance creates fundamental obstacles for the banking industry. 

This challenge also arrives at a decisive economic moment. Sri Lanka is accelerating its digital transformation with the National Digital Economy Strategy 2030 targeting a 4x increase in the digital economy to $ 15 billion by 2030.

While ambitious, the experiences of economies and institutions that have pursued progressive innovation approaches have unlocked exponential growth. Given the challenges and opportunities ahead, HNB Managing Director/CEO Damith Pallewatte believes such an exponential journey is no longer optional for Sri Lanka.

“We are encouraged by the recent momentum and sincere commitment that we are seeing from all sides to accelerating Sri Lanka’s digital economy. I believe all Sri Lankans understand the immense challenges that we must overcome to ensure a durable recovery. Digitalised banking infrastructure will serve as the foundation of this transformation, unlocking transformative productivity gains,” he said. 

For an organisation like HNB that has been aggressive in its digital transformation, innovation – both strategic and technological, is part of its DNA.

Engineering an innovation ecosystem

From its early history to the present, the bank has been a first-mover on partnerships and technologies that deliver meaningful progress on financial inclusion and empowerment for individuals and enterprises across the island.

According to Pallewatte, those foundations together with recent strategic realignments are now clearing the path for an ambitious new wave of innovation-led growth as part of a broader push to make HNB Sri Lanka’s most future-ready bank.

“In setting up the vision and strategy over the medium-long term, we spent considerable time with our teams on lessons learned from prior digital transformation experiences. We also examined the bottlenecks encountered and emerging global best practices that could be adapted to solve challenges faced by our customers.

“What became clear is that to innovate, we needed to experiment with broad-based solutions. Individual business verticals would always run into practical constraints or only focus on areas with direct visibility. True value could only be unlocked by working across these verticals.”

He explained how in a more interconnected operating environment, useful ideas often emerge through partnership; whether across HNB’s business units or with fintechs, technology providers, startups, academia, and even students and young innovators. In essence: an innovation ecosystem.

Dual-speed innovation: centralising ownership, harmonising delivery

Over the past year, HNB has moved to unlock that potential through strategic internal realignment. Following a 2024 review of its digital strategy, the bank began aligning technology explicitly to growth.

Among the first changes was establishing a Chief Innovation Officer (CINVO) role, explicitly charged with building and orchestrating an innovation ecosystem across the institution and aligning it with the Chief Information Officer, Project Management Office and the Chief Data Officer.

The CINVO owns the innovation agenda end-to-end, including the newly launched HNB Innovation Studio—which rapidly designs experiments, iterates in a sandbox, and advances only those meeting pre-set success criteria. Development on promising ideas is enforced with budget and timeline discipline to move from pilot to scale without drift.

The model represents a structural answer to the innovation-compliance tension that defines regulated banking. Appointed to lead it is Chandima Cooray, a visionary technologist with over 25 years of diverse entrepreneurial experience leveraging technology to solve complex business challenges.

“The ability to operate at dual-speed is essential to driving innovation without compromising stability and security,” he said. “The Innovation Studio trials new capabilities in safe sandboxed loops. Every initiative starts with a value hypothesis and scorecard—we pilot quickly, measure impact, and only scale when controls are satisfied. The idea is to innovate rapidly, fail safely, and deliver real value.”

Meanwhile the CIO continues to take custody of core systems, ensuring stability, security, and near zero downtime. In parallel, the CDO builds HNB’s data spine: architecture, governance, and analytics that embed completeness, availability, and integrity while strengthening privacy and compliance.

Just as importantly, business verticals (Corporate, SME, Retail) sit under Chief Operating Officer Sanjay Wijemanne, with segment-agnostic capabilities (Digital, Transaction, Islamic Banking, Trade Finance) cutting across all three.

The total effect: less friction, more cross-pollination. By providing the Innovation Studio with a clear view of customer and employee needs bank-wide, IT and Data work in concert rather than through fragmented reporting lines.

This is also an ecosystem play. Where it accelerates value, HNB will collaborate with fintechs, technology providers, startups, academia, and student innovators.

Innovation in action: HNB Accept

That discipline is already shaping live work. In September 2025, just months after the structural realignment, HNB launched HNB Accept at the Sri Lanka FinTech Summit – a demonstration of the dual-speed model delivering tangible results.

Powered by Visa, HNB Accept represented a global first launch that enables small merchants or individuals who transact regularly to accept credit and debit card payments directly on their smartphone through the HNB Mobile App, without investing in traditional POS or mPOS devices with no further paper waste.

The execution timeline validates the organisational redesign. “From the day we decided to pursue this, we had three months to make decisions, handle technology integration, and launch at the FinTech Summit,” Cooray explained. “That was only possible thanks to this model. The Innovation Studio working in concert with the CIO’s implementation capabilities, clear project management oversight, and direct alignment with business requirements.”

The product addresses fundamental market friction: small merchants accepting digital payments through manual bank transfers require customers to enter CEFT numbers, select banks, and navigate multiple error-prone steps.

HNB Accept collapses that friction into a simple smartphone transaction, democratising access to digital payment acceptance and accelerating Sri Lanka’s shift from a 90% cash-based economy toward the digital transaction infrastructure necessary for broader economic transformation.

Ecosystem expansion: Beyond single products

HNB Accept represents one strand of coordinated innovation flowing through the new governance architecture. Internal efficiency initiatives run in parallel, including agentic AI pilots designed to automate routine processes so customer-facing staff can handle higher transaction volumes and deliver faster, more personalised service.

Home loan evaluation processes are being re-engineered through AI-assisted assessment, with the goal of enabling same-day credit decisions rather than multi-day approval cycles; a direct customer experience improvement that also reduces operational costs.

“We’re looking closely at experiences and lessons from regional leaders across Singapore, India, the Middle East, and Africa who have successfully navigated this transformation,” Cooray noted.

“The important lesson is that we don’t want to build everything ourselves. There are fintech startups and technology partners who excel at solving specific problems. Our role is to provide the platform, governance, and integration capabilities, ensuring that any innovation entering our ecosystem follows the same ethics and values that define HNB while delivering measurable customer benefit.”

HNB’s realignment positions the institution as a key driver of innovation at scale in Sri Lanka’s digital economy evolution. The Innovation Studio’s early successes provide validation of the model’s effectiveness. However, the broader test lies ahead: sustaining and scaling proven innovation across the network and continually evolving the ecosystem to meet emerging customer needs in an increasingly digital market.