The integration of artificial intelligence (AI) into Sri Lanka’s financial sector is still in its early days, but its impact is already palpable. From fintech innovations to advanced fraud detection and improved customer service, AI is driving financial inclusion, enhancing operational efficiency and refining customer experiences, as well as improving quality of life and national competitiveness on the global stage.
In March this year, the Ministry of Technology released a white paper developed by the Committee on Formulating a Strategy for Artificial Intelligence on AI in Sri Lanka. This stated that the country is developing a five-year National AI Strategy under the guidance of a cross-sectoral committee, involving representatives from academia, industry and the United Nations Development Programme.
The 2024 Budget, meanwhile, earmarked LKR 1.5 billion to lay the groundwork for AI innovations across sectors. In line with Sri Lanka’s National Digital Strategy 2030, a centre will be established to coordinate AI efforts, providing a framework for research and development.
At the forefront
Though the public sector has been lagging behind the implementation of AI in state operations, the private sector has been catching up. Examples of successful implementation programmes in the financial services industry include Sampath Bank’s pioneering introduction of Sri Lanka’s first AI banking robot as well as its virtual teller machine, offering services such as account opening, fund transfers and debit card issuance.
Sophisticated algorithms monitor financial transactions, flagging potentially fraudulent activities
The Commercial Bank of Ceylon uses AI to enable stakeholders to navigate annual report data, where instead of manually searching through pages of the report, users can now simply type questions or keywords into the AI-powered annual report assistant (AIPARA) interface.
Seylan Bank’s machine learning-powered tool, Affiniti Collect Plus, supports debt collection and portfolio management by automating key processes. The tool leverages machine learning to enhance productivity, profitability and customer experience by refining collection strategies, minimising human errors and improving the management of lending portfolios.
People’s Bank has speeded up the loan process through digitisation, as well as introducing a multilingual AI-powered chatbot to its website. The bank plans to expand its digital customer engagement capabilities by extending the chatbot’s availability to platforms like Messenger and WhatsApp.
Fraud focus
One of AI’s most promising global applications in banking is automated fraud detection. Sophisticated algorithms now monitor financial transactions, flagging potentially fraudulent activities through techniques like pattern recognition, data mining and machine learning. These systems can detect anomalies that may indicate identity theft, money laundering or credit card fraud, and even identify suspicious online activity such as phishing attempts.
A blend of innovation and regulation will be crucial
Similarly, automated credit scoring uses algorithms to assess creditworthiness by analysing factors such as credit history, income and debt-to-income ratios. This speeds up the credit assessment process and also enhances accuracy, supporting more informed lending decisions.
AI’s reach extends to protecting customer data, too. AI-driven tools can detect and prevent data breaches, unauthorised access and other security threats, while automation helps in encrypting sensitive data to guard against potential breaches.
Enhanced inclusion
As Sri Lanka recovers from an unprecedented economic crisis, financial inclusion is vital to promote growth and improve the quality of life, particularly for underserved groups. While the country has made commendable progress, with 88% of adults now having bank accounts (South Asia’s average is 68%), challenges remain. Use of financial products such as mobile money, insurance and credit remains low, especially among micro, small and medium-sized enterprises, which often face barriers to accessing formal credit.
According to the Ministry of Technology, there is a notable shortage of Sri Lankans with advanced AI engineering skills, coupled with insufficient executive and strategic expertise needed to create compelling AI business cases. This situation is further complicated by a significant brain drain, as well as low levels of basic computer, digital and data literacy.
Additionally, issues related to the availability, accessibility and representativeness of data persist. The effective development and deployment of AI technologies are hindered by the absence of a robust data strategy and a comprehensive data governance framework, both of which are essential for responsibly extracting value from data.
Although the Cabinet of Ministers approved the implementation of the National Strategy in late August this year, it remains uncertain whether the newly elected government will pursue this strategy or introduce a new approach. However, industry bodies are hopeful for positive actions from the current government, especially after the upcoming parliamentary elections.
As AI continues to evolve, it is vital that regulators develop effective frameworks to oversee its use, in order to balance innovation with customer protection, while also addressing existing challenges to boost technical skills, sharpen business insight, upgrade technology infrastructure and improve data governance.
More information
Find out more about the impact of AI at ACCA’s annual conference Accounting for the Future on 24–26 November, including a session on ‘Rise of the humans: our future in an AI world’. Register to watch live on or demand – and earn up to 21 free CPD units.
