Hasrath Munasinghe, Deputy General Manager – Retail Banking & Marketing of Commercial Bank, highlights global payment trends influencing Sri Lanka’s banking industry and how Commercial Bank is leveraging digital technology.
By 2022, rising smartphone use in Sri Lanka led to a shift towards mobile payments, aligning with global trends. Digital wallet users are expected to surpass 5 billion by 2026 and the total value of digital wallet transactions is expected to exceed $16 trillion by 2028. “Smartphone adoption has driven the shift to digital wallets and mobile payments in Sri Lanka,” says Munasinghe.
Commercial Bank is adapting to these trends with its Q+ Payment App, the first launched under LANKAQR, supporting multiple QR systems for local and international users. The bank is also incorporating new features and AI-driven personalization to enhance customer experiences while prioritizing security with tools like multi-factor authentication and biometric security.
To boost digital payment adoption, the bank is creating an integrated experience across apps, websites, and branches. “By adapting global insights to the Sri Lankan market, Commercial Bank is positioning itself as a leader in digital payments,” Munasinghe adds.
How is the bank driving the adoption of card and mobile-based payments among its customers, especially in rural areas?
We have implemented a strategy leveraging technological innovation, strategic partnerships, and our extensive presence across Sri Lanka. A key initiative in this strategy is the Q+ Payment App, which uniquely supports seven QR code systems (including LankaQR, Visa QR, Mastercard QR, UnionPay QR, AliPay, WeChat Pay, and UPI QR). This integration facilitates seamless transactions for local and international consumers, significantly enhancing user convenience while fostering a robust digital payment ecosystem in Sri Lanka.
Our efforts are bolstered by the most widely spread POS network in the country, coupled with our extensive branch network across urban, outstation cities, and rural areas. We continuously encourage the use of debit and credit cards by promoting their usage in all regions, not just urban centres. To promote adoption, we offer compelling cashback schemes, exclusive discounts, and regional promotional campaigns tailored specifically for mobile payments.
In addition, we actively promote the Q+ Payment App by sponsoring lifestyle events, increasing its visibility across diverse demographics. Regional campaigns, particularly in semi-urban areas including North and East, benefit from the app’s trilingual support in Sinhala, Tamil, and English, enhancing accessibility and broadening our customer base. Our customer service team is always on hand to provide dedicated support, ensuring a seamless user experience.
Finally, our commitment to security ensures that all transactions are protected with the highest standards. The Q+ Payment App complies with PCI DSS, utilizes advanced encryption techniques, and incorporates biometric authentication to safeguard user data. Continuous enhancements such as JustPay integration and multi-bill payment capabilities reflect our dedication to delivering an exceptional user experience.
What are the challenges Sri Lanka faces in adopting mobile-based payments at scale?
There are several. A critical issue is the pervasive lack of financial literacy, particularly in rural areas, where numerous individuals remain unfamiliar with digital payment mechanisms and exhibit reluctance to transition from cash-based transactions. Although smartphone penetration is increasing, a substantial share of the population primarily uses mobile devices for communication and entertainment rather than financial activities.
Infrastructure deficiencies further complicate this landscape, especially in remote regions where internet connectivity is sporadic and unreliable. A thriving mobile payment ecosystem necessitates consistent internet access, which remains an elusive goal nationwide. Additionally, apprehensions regarding security, encompassing data privacy and potential fraud, inhibit users—particularly among older demographics—from fully embracing mobile payment solutions, despite significant advancements in encryption and authentication technologies.
Merchant acceptance presents another significant obstacle, as many small enterprises, especially in rural areas, hesitate to adopt digital payment systems due to perceived costs and unfamiliarity and their requirement for cash in hand. While regulatory frameworks are progressively improving, they are still evolving to create a seamless mobile payment environment. Addressing these challenges is imperative for Sri Lanka to successfully harness the transformative potential of mobile-based payments across the nation.
How has the pandemic changed customer behaviour towards cards, digital banking, and mobile-based payment services?
The pandemic significantly altered customer behaviour. The demand for contactless transactions surged, leading to increased usage of contactless cards and mobile payment options as consumers sought safer alternatives. This trend accelerated the adoption of QR code payments and contactless debit/credit transactions, shifting customers away from cash and towards digital solutions.
Notably, there has been a marked increase in debit card usage at Point-of-Sale (POS) terminals, reflecting a shift from cash to direct card payments both in-store and online.
Mobile payment apps gained traction due to their convenience, ease of use and security, becoming essential as socially distant options emerged. Interestingly, demographics previously hesitant, such as older generations, have now embraced these technologies. This shift has prompted a greater focus on financial management, with customers using banking apps to monitor expenditures and automate payments. The rise of e-commerce during lockdowns further contributed to increased online transactions, compelling banks to enhance their digital platforms for seamless online and mobile banking experiences.
What lessons can Sri Lanka learn from global banking markets about digital payments and customer engagement?
Sri Lanka has the potential to gain significant insights from both global and regional banking markets by embracing transformative trends in digital payments and customer engagement.
One of the key lessons is enhancing the payment ecosystem through embedded finance, gamification, social commerce, virtual cards, and loyalty rewards. These tools offer more integrated financial experiences, providing customers with convenience while fostering deeper engagement. For instance, virtual cards and loyalty programmes can drive repeat transactions and build lasting customer loyalty, while social commerce creates new avenues for digital payments through familiar platforms.
AI-driven personalization and predictive analytics are essential for improving customer satisfaction. Leading global banks are using AI to deliver tailored communication and customized products. Sri Lankan banks can similarly benefit from leveraging data-driven insights to personalize services and anticipate customer needs while maintaining strict adherence to data protection regulations. Additionally, robust fraud prevention mechanisms, such as multi-factor authentication, biometric security, and encryption, will be vital as digital payment volumes increase, ensuring consumer trust and security.
The integration of lifestyle applications that blend financial and non-financial services can streamline the user experience, enabling seamless transitions across platforms. An omnichannel approach that integrates mobile apps, websites, and in-branch services ensures a cohesive customer journey across all touch points.