Sri Lanka is witnessing the emergence of a vibrant fintech landscape, supported by a developing infrastructure that facilitates cashless transactions and digital finance, and rising digital literacy.
According to Dr. Kumudu Megasooriya, Chairperson of Sri Lanka Fintech Network, the current macroeconomic and social conditions are providing an ideal opportunity for the government to establish a robust digital finance strategy. However, she emphasized the importance of treating digital finance as a core economic infrastructure rather than a niche sector, and the necessity of collaborations among stakeholders in the industry.
In a guest column published on Daily FT, Sri Lanka’s leading daily business newspaper, Megasooriya presents a compelling argument for Sri Lanka’s potential to become South Asia’s next fintech innovation hub. She analyzes the current state of the market and the favorable conditions for the development of a thriving fintech ecosystem.
According to Megasooriya, Sri Lanka’s post-crisis stabilization has created a rare policy window to pursue fintech as a national competitive priority. This recovery has been driven by rising domestic consumption, increased investment, and improved performance in the industry and services sectors.
In 2024 and 2025, GDP growth stood at 5%, with both years performing above earlier expectations. Inflation has also moderated, and the country’s reserves have been rebuilt.
This recovery followed a period of severe economic difficulties between 2018 and 2022, including the COVID-19 pandemic, foreign exchange (FX) shortages, and the 2022 economic crisis.
Sri Lanka is also home to a growing and credible technology workforce. Although its economy mostly relies on tourism, manufacturing, and agriculture, there is a growing software and information technology (IT) sector that’s competitive and open to global competition. In 2023, the export revenue of the IT industry stood at more than US$1 billion in 2023, up from US$213 million in 2007. This sector is supported by a highly skilled, English-proficient workforce of more than 175,000 professionals, and over 4,000 registered software firms, according to government data.
The convergence of dimensions
According to Megasooriya, these factors present an opportunity for policymakers, regulators, and financial institutions to think beyond crisis management, and focus on deliberate, long-term positioning.
For Sri Lanka to succeed to its fintech endeavor, she emphasizes the need for the convergence of several key dimensions.
First, digitized financial rails are essential. These rails reduce transaction costs, shorten settlement times, and enhance capital allocation across the economy, freeing up resources currently lost to friction and delay.
Second, credible digital finance infrastructure and regulatory clarity are prerequisites for substantial institutional capital and for investor participation.
Furthermore, the creation of career paths that offer competitive opportunities compared to those abroad is crucial. This will attract skilled talent domestically and prevent it from migrating abroad.
Megasooriya advises Sri Lanka to focus to develop its software engineering base and transforming it into higher-margin financial products. The goal should be to move up the value chain from outsourced coding to owning intellectual property.
Furthermore, alternative credit scoring and faster, less collateral-dependent lending should be encouraged and boosted to unlock working capital for small and medium-sized enterprises (SMEs) that anchor the real economy. For consumers, digital finance can reach underserved and rural populations at a fraction of branch-based cost while extending credit, savings, and insurance to households the traditional banking system has struggled to serve.
Finally, Sri Lanka should focus on making its economy more formalized and traceable. This will narrow informality and widen the tax net without necessarily raising rates. In addition, stronger tax administration, welfare disbursement, and fiscal transparency improve the government’s own financial management while reducing leakage.
Megasooriya notes that these dimensions are interconnected: financial inclusion drives SME formalization; formalisation drives tax revenue; and tax revenue funds the public digital infrastructure that inclusion depends on in the first place.
She emphasizes the need for a comprehensive fintech strategy. Given the far-reaching impact of fintech and digital finance on various economic and societal dimensions, this strategy cannot be delegated to a single ministry or regulator operating in isolation. Instead, it requires coordinated efforts across the entire industry.
Digital infrastructure and government support
Sri Lanka has a developing fintech industry, supported by rising digital literacy and the development of robust payment and digital infrastructure.
According to the Department of Census and Statistics (DCS), digitally literacy stood at 70.8% in H1 2025. The computer literacy rate was 38.4% during the same period, up from 36.4% in 2024.
Key infrastructure supporting this ecosystem include LankaPay, the country’s national payment network; JustPay, a digital retail payment platform created by LankaPay; LANKAQR, the national QR code payment standard; and the Common Electronic Fund Transfer Switch (CEFTS), Sri Lanka’s core real-time, 24/7 digital financial infrastructure for financial institutions.
The Sri Lanka Unique Digital Identity (SLUDI) is also poised for launch, adding to this digital stack. SLUDI aims to issue secure, biometric-backed digital ID cards to citizens, acting as a digital economy enabler that streamlines identify verification, and which facilitates digital transactions across sectors.
Sri Lanka’s financial regulator, the Central Bank of Sri Lanka (CBSL), is also actively pushing the ecosystem towards digital payments. Its 2025 and beyond agenda explicitly calls for improving payment infrastructure, legislation and public trust in digital payments.
Sri Lanka’s nascent fintech industry
Sri Lanka’s fintech industry is experiencing steady growth. Despite being still nascent compared to some of its neighbors, this ecosystem now boasts 155 market participants, including 19 identified fintech startups, according to Udeni Weerabahu, a tech executive based in Colombo.
These startups span a diverse range of verticals. Companies like DirectPay and PayHere offer secure and user-friendly payment gateways. In lending, platforms like CIXOR PayDay allow employees to access a portion of their earned wage via a secure mobile app.
Insurtech is also gaining traction, with InsureMe emerging as one of the leading insurance brokers in the country.
Featured image: Edited by Fintech News Singapore, based on images by coffeemill and obrako0 via Magnific
