CBSL Governor calls fintech net benefit for all stakeholders

• Digital financial infrastructure is not a cost but a net benefit
• Regulator aims to spur innovation while managing risk
• National Payment System roadmap to strengthen role of fintech firms
• Pledges regulatory guidance to balance stability, consumer protection and innovation

Central Bank Governor Dr. Nandalal Weerasinghe, delivering the keynote address at the inaugural Sri Lanka Fintech Summit 2025 at the BMICH yesterday, said fintech innovation must be understood as a net benefit rather than a cost, provided stakeholders share those benefits fairly and collaborate to build trust and inclusion.

Reflecting on Sri Lanka’s recent economic crisis and the Government’s emphasis on the digital economy, Dr. Weerasinghe described the current moment as an “important opportunity” to accelerate financial innovation. 

He welcomed the establishment of a dedicated ministry for digital economy, led by a minister and advised by experienced technical experts, as a sign of commitment to reform. 

“It is a matter of proper coordination and collaboration,” he said. “We can look forward to this ministry promoting the economy and making benefits for the country out of it.”

Dr. Weerasinghe recalled remarks he made at the annual meeting of the Alliance for Financial Inclusion in Africa a month earlier, where central banks debated who should bear the costs of digital financial infrastructure. 

“The point I made, which was appreciated by everyone, was that promoting digital financial infrastructure is not a cost, it’s a net benefit to all stakeholders,” he said. For central banks, digitalisation reduces the cost of printing and circulating cash; for commercial banks, it lowers expenditure on cash handling and financing; and for consumers, it saves time and money while widening access to services. 

“It’s not a zero-sum game,” he explained. “It is a net benefit for everyone. The question is how we can share the benefits equally and fairly among stakeholders.”

Collaboration, he argued, is key. “We need strong collaboration among financial institutions, regulators, government leadership and the public,” he said, adding that only then would fintech deliver on its potential to strengthen economic stability and growth.

Turning to the broader context, Dr. Weerasinghe described digital transformation as a structural shift. “In the 21st century, digital transformation not only drives economies but also redefines how societies connect, communicate and create opportunities for sustainable growth,” he said. 

The financial sector, he noted, stands at the core of this transformation because of its vital role in stability, access to credit and savings, and safeguarding resources. “A healthy financial sector promotes stability, enables access, supports investments and is critical to the prosperity of a country,” he said.

Sri Lanka’s financial system already has wide public penetration compared with many other countries, but as the economy emerges from crisis, it faces the challenge of combining stability with growth and inclusion. “Now is the time that we have more decisions on the future of finance and inclusion,” Dr. Weerasinghe said. “Technology-enabled innovation in financial services has enormous potential to meet the real needs of the public.”

He positioned fintech as an intersection of three dependent segments: fintech activities such as lending, payments and asset management; enabling technologies such as cloud, AI and big data; and policy enablers such as digital identity, data protection and cybersecurity frameworks. 

Together, these can lower costs, expand access, improve risk management, and enhance the customer experience. “The biggest benefit of this initiative is to the public,” he stressed.

But Dr. Weerasinghe also warned of risks. Fintech firms must demonstrate compliance to build trust, he said, and rapid expansion into new segments could expose the system to vulnerabilities. “It is important to have proper compliance before services are offered to the public,” he noted. To support innovation responsibly, the Central Bank launched a Fintech Regulatory Sandbox in 2022. 

Although uptake was initially slow, criteria were relaxed this year to encourage more participation. “This sandbox provides a controlled environment for innovators to test new products and services without the risk of irreversible damage,” he said, citing examples of success such as Domain of Farmer.

He said Sri Lanka now has a rapidly expanding payments system with multiple services serving retail and wholesale needs, provided by both traditional institutions and fintechs. A new National Payment System roadmap, drafted by an expert committee, will strengthen the role of fintechs in future development. 

“Ensuring safety and efficiency in payments is critical,” he said, emphasising that regulation will be calibrated to both traditional and fintech firms to protect stability while enabling innovation.

Looking ahead, Dr. Weerasinghe underlined the Central Bank’s commitment to guiding the sector. “The Central Bank will continue its commitment to provide regulatory guidance to minimise risks and build trust,” he said. 

“To ensure financial stability, consumer protection and sustainable innovation, appropriate security measures must underpin all initiatives.”

He acknowledged that Sri Lanka has already seen a noticeable shift in its financial landscape, with more institutions adopting technology and new firms offering novel services. 

From the consumer perspective, this has created a diverse set of offerings that ease the transition between traditional institutions and new fintech innovations. From a business perspective, he said, innovation must go hand in hand with compliance to sustain confidence.

In closing, Dr. Weerasinghe struck a balanced note, encouraging adoption while warning against complacency. “Technology has worked for us for decades and has become stronger with financial services,” he said. “We can expect these synergies to only grow in time. Financial institutions must therefore be open and dedicated to responsible innovation, for the good of everyone.”