Banking leaders call for stronger governance, trust and resilience to future-proof sector

CBSL Governing Board Member Manil Jayesinghe	HNB CEO Damith Pallewatte	Commercial Bank CEO Sanath Manatunge

Sri Lanka’s banking sector must strengthen governance, internal controls, and institutional resilience to navigate an increasingly complex operating environment marked by cyber threats, technological disruption, climate risks, and evolving regulatory demands, leading banking executives and regulators said at a Daily FT-ACCA-ICCSL webinar on future-proofing the industry. 

Speaking at the event, Central Bank of Sri Lanka (CBSL) Governing Board Member Manil Jayesinghe said governance should remain the foundation of sustainable banking, with greater emphasis on Board effectiveness, accountability, transparency, and a risk-focused culture.

 He argued that banks must move beyond reviewing past events and instead develop forward-looking systems capable of identifying emerging risks through early warning indicators, predictive analytics, and real-time monitoring. 

Jayasinghe said the growing sophistication of cyber threats requires banks to increasingly deploy artificial intelligence (AI) and automated monitoring tools to detect anomalies and fraud, while continuously reassessing traditional control frameworks that may no longer be adequate in a digitised environment. He also stressed the importance of strengthening risk culture across organisations, arguing that risk management should not be confined to senior management but embedded throughout institutions. 

Hatton National Bank PLC (HNB) CEO Damith Pallewatte framed the challenge as one of adaptability rather than prediction, noting that Sri Lankan banks had remained operational through successive shocks including the Easter Sunday attacks, the pandemic, sovereign default, currency depreciation, and inflation volatility. He said the key question was not whether another crisis would emerge, but whether banks would be prepared when it does.

Pallewatte identified five priorities for future-proofing the sector: financial resilience, trusted digital transformation, human capital development, sustainable growth, and ecosystem-wide collaboration. He said strong capital buffers, liquidity management, and asset quality remained essential, while digital transformation must be accompanied by governance, ethical use of AI, data protection, and cyber resilience. 

He also highlighted the need for closer collaboration among banks, regulators, fintech firms, universities, and professional bodies to address emerging talent and technology challenges.

Commercial Bank CEO Sanath Manatunge said uncertainty had become a permanent feature of the operating environment, with geopolitical developments, climate events, cyber risks, and AI creating increasingly interconnected threats for financial institutions. He argued that resilience could no longer be measured solely through capital adequacy, liquidity buffers, or profitability.

Instead, Manatunge proposed a framework built on four pillars: financial resilience, cyber resilience, responsible innovation, and trust resilience. He warned that while AI offered significant opportunities to improve customer service, fraud detection, and risk management, it also introduced new governance and compliance risks if deployed without adequate oversight.

A recurring theme across the discussion was the importance of trust. Speakers argued that customer confidence remains the banking sector’s most valuable asset and that governance, cybersecurity, operational resilience, and responsible use of technology ultimately serve to preserve trust in financial institutions during periods of uncertainty. 

The discussion comes as banks globally face mounting pressure to balance rapid digital transformation with stronger governance frameworks, while adapting to an increasingly volatile risk landscape.