From fraud detection to seamless customer experiences, AI is driving a silent revolution in Sri Lanka’s digital payments landscape, opening new doors for financial inclusion and innovation.
Sri Lanka is entering a new era of digital transformation, with Artificial Intelligence (AI) at the forefront of revolutionising the way payments are made and managed. As consumers, merchants, and financial institutions increasingly adopt digital payment systems, AI is helping reshape the industry – making transactions faster, safer, and smarter. This quiet revolution is not only enhancing user experiences but also laying the foundation for a more financially inclusive and resilient economy.
Traditional payment ecosystem
Despite major strides in digital adoption, Sri Lanka’s financial ecosystem has long struggled with fragmentation, security concerns, and limited access for rural communities. Traditional systems are often slow to process transactions, vulnerable to fraud, and expensive to maintain. Banks and fintech firms face difficulties in managing risk, ensuring compliance, and meeting the demands of a rapidly evolving consumer base.
Cash still plays a dominant role in many parts of the island, limiting the reach of digital innovation. This has created a bottleneck in financial inclusion and slowed the rollout of more advanced financial technologies. Against this backdrop, AI emerges not merely as a technological upgrade but as a transformative solution capable of bridging these systemic gaps.
Advantage
AI is redefining how digital payments operate in Sri Lanka, providing capabilities that go far beyond traditional rule-based systems. One of the most powerful applications is in fraud detection and prevention. AI-powered algorithms analyse transaction patterns in real time, flagging suspicious activity and reducing the risk of financial crime. This proactive approach allows payment providers to safeguard their networks without disrupting the customer experience.
Another area where AI is making a significant impact is in customer service. Chatbots and virtual assistants, driven by natural language processing, are being deployed by banks and payment platforms to handle queries, resolve issues, and offer personalised financial advice around the clock.
AI also plays a critical role in credit scoring, particularly for unbanked individuals. By analysing alternative data such as mobile usage, transaction history, and social behavior, AI can generate accurate risk profiles, enabling access to loans and other financial services previously out of reach for many Sri Lankans.
Innovation
Sri Lanka’s fintech sector is poised for a significant leap forward. Government initiatives such as the National Financial Inclusion Strategy and the Central Bank’s push for a digital economy provide a fertile environment for AI-led innovations. As connectivity improves and smartphone penetration deepens, AI-powered platforms will become increasingly accessible, even in rural and underserved areas.
Startups and established financial institutions alike are expected to harness AI to develop next-generation solutions — smart wallets, biometric authentication, voice-activated payments, and predictive analytics for spending habits. These innovations not only make financial services more intuitive but also empower users to make better-informed financial decisions.
Importantly, AI can help Sri Lanka integrate more fully into the global digital economy. Cross-border payments, remittances, and international trade finance are all areas where AI can streamline operations, reduce costs, and enhance security, positioning the island as a key fintech hub in South Asia.
Smarter financial future
The AI transformation in Sri Lanka’s digital payments sector is still in its early stages, but the trajectory is clear. For this revolution to realise its full potential, collaboration is essential. Policymakers must create adaptive regulatory frameworks that encourage innovation while safeguarding users. Financial institutions should invest in AI talent and infrastructure, and startups must continue pushing the boundaries of what’s possible.
Most importantly, education and awareness are key. Consumers need to trust and understand these new technologies to use them effectively. Industry leaders, educators, and the government must work hand-in-hand to build digital literacy and ensure no one is left behind.
The future of Sri Lankan fintech is intelligent, inclusive, and AI-powered. It’s time for all stakeholders — banks, developers, regulators, and users — to embrace this transformation and help shape a smarter, more connected financial ecosystem.
The writer is Head of Products and Innovation, CrossBoarder Payments (Pvt) Limited
