LankaPay Opens to the World: Internationalizing Sri Lanka's Payment System & Why It Makes Sense

A new wave of digitization driven by the internet’s widespread and smartphones have changed payment systems more recently.

The widespread use of digital payments can supercharge an economy, by enabling near-instant transactions, and remote payments, lowering costs, and making it possible for consumers, financial services firms and businesses to reduce the friction of moving money.

LankaPay (previously known as LankaClear) has played a leading role in the spread of digital payments in Sri Lanka. The digital payments network consists of multiple systems working in synchrony with the financial institutions and regulated by the Central Bank. LankaPay, which is owned by the Central Bank and other licenced commercial banks, is widely recognized as one of the most successful Public-Private Partnerships (PPP) in the region. LankaPay has been making significant strides in expanding its network and partnerships, particularly in the Asia-Pacific region. One notable accomplishment is its recent inclusion in a 13-member network, enabling seamless cross-border payments. Additionally, LankaPay has collaborated with JCB to implement a national card scheme, providing a globally accepted card through the JCB network. The company has also forged partnerships with Union Pay International and the National Payments Corporation of India, allowing for cross-border payments at LankaQR merchants. Furthermore, LankaPay has joined forces with Fonepay, a Nepal-based company, to facilitate cross-border payments. These collaborations highlight LankaPay’s commitment to enhancing payment services and establishing a robust international presence.

LankaPay’s digital services include Cheque Imaging & Truncation System (CITS), Sri Lanka Inter-bank Payment System (SLIPS), LankaPay Common ATM Network, Real Time Fund Transfer Network, JustPay, LankaSign Certification Service Provider (CSP), USD Draft clearing & Online Payment System (USD ON-LINE), National Card Scheme (NCS), Shared ATM Network and Card Management System (CMS), FINCSIRT, LankaPay Government Payment Platform, CPS, UITS, LankaRemit and Direct Debit. LankaPay has also introduced LankaQR, a QR code-based payment solution, further enhancing the convenience and accessibility of financial transactions.

With its commitment to excellence and adherence to international standards, LankaPay is well-positioned for further expansion in Sri Lanka and establishing links with global payment systems that seamlessly enable cross-border transactions and venture into consultancy services to countries in Asia looking to build national digital payment infrastructures. Its Chairman, Dr Kenneth De Zilwa, Chief Executive Channa de Silva and Deputy Chief Executive Dinuka Perera share insights into LankaPay’s new vision and strategy to propel Sri Lanka’s payments network to a new era.

LankaPay’s Global Vision: Championing the Internationalization of Sri Lanka’s Payment Network

LankaPay Chairman Dr Kenneth De Zilwa on the forces shaping the payments landscape globally and LankaPay’s vision for global reach

Global payments are dominated by lumbering banks, expensive credit cards and cumbersome cash. LankaPay, a digital payments company, operates Sri Lanka’s national payments network, a collection of several systems and products that facilitate digital payments across the economy. Slowly its digital payments systems are overcoming the inefficiencies, exclusion and challenges of traditional payment methods, including the use of cash.

Its digital payments success in Sri Lanka has led the firm to explore opportunities for connecting with payment networks overseas. LankaPay Chairman Dr Kenneth De Zilwa says the company’s global ambitions are twofold: to offer its expertise to other countries, and second, to connect Sri Lanka’s payments network to similar overseas networks.

LankaPay’s recent membership in the Asian Payments Network (APN) was a significant milestone for its strategy of connecting the domestic payments network with global markets, exporting services, and facilitating interactions between Sri Lankan companies and global partners. Excerpts of the interview are as follows:

LankaPay has done a tremendous amount of work in the last few years, so can you tell us about the new vision behind it?

We honed and articulated our new vision based on amplifying and strengthening our core competencies and primary business practices to design and develop solutions that aren’t exclusive to the Sri Lankan market but have broader appeal and relevance beyond our shores; and complied with international standards.

We have identified that these products and services are on par and highly compatible with similar networks in other parts of the world, especially within Asia, where there’s significant growth in the tech and FinTech sectors. This disruptive technology has become a fundamental component of a global business ecosystem in which we actively participate.

Therefore, guided by this realization, we’ve made a deliberate decision to expand beyond Sri Lanka’s borders, laying the groundwork for our global ambitions. This vision forms the strategic direction for LankaPay, as we look forward to partnering with other countries to transform ourselves into an international contender.

Our first move in this direction involves fostering regional integrations with payment and settlement entities across multiple nations. As a significant milestone towards this goal, we’ve recently joined the Asian Payments Network (APN), an alliance that spans 12 countries.

In recognition of our potential, the network appointed LankaPay as co-chair, a significant stride towards actualizing our strategic plan for the company.

So, in a nutshell, our strategy involves expanding into the region, accessing new markets, and exploring the potential to export our services. Conversely, we’re also looking at how we can benefit from the inbound flow of goods and services, boosting our economy.

Furthermore, as we engage in tourism and B2B transactions, we aim to formulate a broader strategy that benefits Sri Lankan companies by facilitating their interactions with global partners.

LankaPay is more than a singular product or service company in Sri Lanka. It’s a journey that started with LankaPay’s cheque-clearing services, which you continue to offer. Your portfolio has since expanded including a common ATM network linking all ATMs, the common EFT network for interbank money transfers, and LankaQR, among others. Which of LankaPay’s products or services are under consideration for international expansion?

We’ve been around for two decades, starting as a cheque-clearing service. The concept of clearing continues to be relevant, especially for asset management companies, global asset management firms, and the investment banks within them, as they frequently settle a lot of derivatives through clearing.

We’re currently exploring ways to re-position our clearing services. While we aim to shift away from cheque-based operations, the infrastructure in place for clearing would remain consistent, so that is our first point of focus. Secondly, our products cater to various societal segments. For instance, we designed our QR code system for retail and SME transactions, where traditional point-of-sale machines can be prohibitively expensive. This solution fosters an ecosystem primarily driven by retail and SME business models, reaching out to the base of the economic pyramid. Affluent individuals and corporations gravitate towards online payments. Our unique selling point is our wide array of products under one roof, designed to cater to different client and corporate segments. This approach mirrors our global strategy.

The question at the forefront of our expansion planning is how we leverage our synergies to gain a foothold in other countries. Whether they are fully developed markets or still maturing, we believe we can create mutual benefits through strategic alliances, and that is the line of thinking currently shaping our strategy.

So it is primarily your common EFT switch, which is the network that connects bank accounts across different banks in Sri Lanka, that you will seek to connect to global networks?

We utilize a central switch model at LankaPay, providing an efficient alternative to single entities connecting separately with individual banks. Our model enables us to grant access to all associated banks in real time, positioning LankaPay as the hub of this payment and settlement system.

Parallel infrastructures exist in other countries as well. For instance, if a bank seeks to connect with another bank in Thailand, the most straightforward path would be to link to their central switch, an entity similar to ours, which opens multiple access points.

This central switch strategy significantly reduces costs. Direct integration with a bank can be expensive, often reaching a hefty sum in the region of $200,000–$300,000. Conversely, connecting to a central switch involves a one-time fee, which permits business transactions with various entities within the country. This efficient and cost-effective approach is the core of our current strategy.

Why is LankaPay going global?

It boils down to our mission and values. Our mission is to foster an environment where other entities and banks can leverage our products and services to their advantage. At LankaPay, we are essentially performing a dual role. We are essentially a Public-Private Partnership (PPP), with a shareholder structure that mirrors a state holding of 48% stake and the private sector owning 52%. As such, we function largely as a private-sector entity.

Our goal is to generate opportunities for Sri Lankan businesses to conduct transactions abroad in a cost-effective and secure manner. Given the high level of competition in today’s business world, transaction costs have become a critical factor. We aim to minimize these costs wherever possible.

A prime example of our approach is our internal dollar settlement clearinghouse, which we’ve been developing for some time. This facility enables transactions between entities within the country to be net-settled, resulting in a single transaction into your Nostro account. Without this mechanism, alternative electronic real-time fund transfer platforms would cost around $20 for each transaction. By routing transactions through LankaPay and utilizing our net settlement mechanism, the cost per transaction is significantly reduced to just $1.

The drive to go global is fuelled by our intent to make these cost-effective solutions available on an international scale, hence enabling our customers to compete more effectively in the global marketplace.

To transform the thinking in an organization from looking inwards to one that starts looking outwards is an inflexion point. What was the trigger?

My background in investment banking has allowed me to take an external view of payments and settlements. I’ve often found myself questioning why we need a cutoff time of 3 p.m. for making payments. As we progress towards a night economy, it’s essential to have functioning payment systems that operate beyond traditional hours, so that there’s no need for people to carry cash. This led me to question the rationale of having a single clearing schedule, and I started exploring the idea of multiple settlement periods throughout the day.

Initially, as you mentioned, LankaPay primarily functioned as a clearing entity. We had a strong team with impressive technical skills, yet the direction of the company was unclear. For various reasons, we were performing more back-office functions and were heavily dependent on banks to take our products to market. This model resulted in some of our products, which have been around since 2007 and 2009, lacking traction.

Take digital signatures for instance. The Digital Signatures Act was passed and amended over a decade ago, yet its adoption has been sluggish. It’s only recently that we’ve revisited our business model and strategy, realizing that we should be at the forefront of technology. Banks have their priorities, which might not align with the broader technological trends.

Recognizing this, we deliberately repositioned LankaPay to not just follow, but lead in technology. As an organization, we need to scan the horizon, identify emerging trends, and figure out how we can be part of, benefit from, and tap into these developments. Given the swift pace of technological change, particularly in Asia, there must be an entity that keeps the country up to speed and drives this change process.

This shift in LankaPay’s positioning has earned us some respect, although we are just at the start of this journey. There’s a lot of positive energy and receptivity towards us, with several entities now expressing interest in partnering with LankaPay.

One notable partnership is with China Union Pay, which has integrated with us to enable their clients, predominantly Chinese tourists, to access our QR network. This is a significant achievement, as it brings LankaPay into the awareness of Union Pay’s 480 million customers and 330 million merchants through a co-branding arrangement.

Similarly, we have partnered with the National Payments Council of India (NPCI) for card integration, which is expected to be completed by the end of July. This will bring a significant amount of traffic our way, benefiting the country.

These synergies underscore the importance of active involvement in the technology sphere. If we don’t seize these opportunities, the country will miss out on potential benefits. Observing this transformation has been truly rewarding.

How will you navigate the regulatory landscape, both domestically and internationally, as LankaPay expands its global reach?

There are two main facets of regulation involved. The first is the internal regulatory obligations of the banks, which fall within the purview of the respective central banks. Our responsibility doesn’t extend to this domain. However, we do oversee some system regulations and compliance requirements to ensure a smooth and dispute-free settlement process. This is our regulatory role.

Venturing overseas poses unique challenges. Although we’ve established a few bilateral agreements, these are mostly reciprocal. Our counterparts handle their regulatory obligations, and we handle ours. This makes the process relatively straightforward.

However, joining the APN network is an entirely different scenario. Our goal in becoming part of the APN network is to establish a shared infrastructure with a common legal framework, much like the ISDA agreement in investment banking. This universally accepted legal document transcends jurisdictions, expediting the legal and regulatory processes and saving time.

Asia, which houses 50% of the world’s population and generates 50% of the GDP, is particularly significant in this regard. The region accounts for 40% of total consumption, and these figures are predicted to rise. According to estimates from McKinsey, Asia could potentially become a $12 trillion economy by 2040.

This transformative period is critical for Sri Lanka as we are witnessing a shift from Western influence to Asian dominance. It’s a unique moment we may not witness again as it signifies the “Asian Century”. Technology, the driving force behind this new business cycle, plays a pivotal role in this transformation.

Unfortunately, most countries in our region operate on a bilateral basis. We are exploring how we can shift from these bilateral arrangements to a more unilateral approach that could benefit all involved parties. Such a move could potentially result in significant cost savings. This, however, is a process we are still actively working on. Therefore, I believe our unique value proposition must be one that reflects our assets (i.e., our employee’s knowledge) and what we offer is “interoperable profit-enhancing, frictionless, real-time global payments and settlement solutions”

As LankaPay positions itself to compete on a global stage and interact with larger regional players, what internal transformations are required? Specifically, what aspects of the company culture, strategy, and vision need to evolve to create a globally competitive business?

The transformation of LankaPay has necessitated an overhaul of our entire organizational culture. At both the senior management and board levels, we’ve invested substantial time and effort in this endeavour, and we’ve been fortunate to have the unwavering support of our dynamic and cooperative board. Any initiative we’ve proposed has received backing, and it’s been a privilege to collaborate with these stakeholders in driving LankaPay’s metamorphosis.

When we initiated the transformation, it became clear that our people were ready for this change. Despite brimming with talent, they’d been under-utilized and often overlooked. Our compensation package wasn’t competitive, which made retaining and attracting the best talent difficult. Therefore, we had to revise our benchmarking, and compensation, and adopt best practices from other industries.

Our Human Resources (HR) department had to be rebranded to better suit the changing global business landscape, our organization’s dynamic nature and added technological sphere of operation. We sought the expertise of consultants and transitioned HR to organizational development and talent management. This move reflected our understanding that managing people goes beyond processing CVs. It involves understanding each individual’s motivations and aspirations, and realizing that a one-size-fits-all approach is no longer effective.

Today, we see a noticeable shift in our staff’s happiness and enthusiasm, not only due to improved compensation but also because of the overall transformation of the organization. This shift allows us to foster a more vibrant and forward-looking culture, which is fundamental in propelling LankaPay’s purposeful future.

This is our third year into this transformation and the first fiscal year with a full-fledged branding change from LankaClear to LankaPay. However, we didn’t rush into introducing new brand guidelines an branding before establishing the new functions in organizational development and talent management.

Our new compensation package, comparable to those offered by Silicon Valley companies, enables our staff to participate in our success and claim ownership of the company. To foster this sense of ownership, we’ve introduced a share option scheme.

Despite the significant progress we’ve made so far, we are aware that there’s still much work ahead of us. Our employees now have a clearer vision and stronger confidence in their abilities, and they’ve shown an eagerness to shoulder more responsibilities. However, I’ve emphasized to the senior management team the critical importance of execution. Setting a timeline and failing to deliver is not an option in our culture. I firmly believe that our transformation journey will succeed through this commitment to execution.

As you globally expand and scale LankaPay, how integral are partnerships to your strategy? Are they central to your growth plan, or are they more of a beneficial addition?

Partnerships are central to our strategy. Neither local nor global growth is conceivable without meaningful collaboration. For instance, even locally, the rapid emergence of FinTech companies, with their dynamism and passion, is something we cannot ignore. Especially in spaces like SMEs or microfinance, where banks might not be present, FinTechs are stepping in and filling the gaps.

In Sri Lanka, a substantial portion of the population remains unbanked, often due to language barriers and concerns over complicated procedures like KYC. We’ve seen this apprehension even in our ATMs, where users prefer transacting in their native languages, Sinhalese and Tamil, out of fear of mis pressing buttons in unfamiliar languages. Once a transaction is made, reversal might be possible, but it’s time-consuming, and if money is gone, it’s gone.

This is where collaboration with local partners who understand the nuances of language and culture becomes crucial. As we go global, we need partners who can guide us and help navigate the complexities of diverse markets. Consequently, we should anticipate and be open to a variety of partnerships. A one-size-fits-all, cookie-cutter approach simply won’t suffice in our line of business. This perspective is something that our board has recognized and is something we are actively fostering within our organizational culture.

Could you elaborate on how LankaPay will compete on a regional scale? Specifically, in terms of payment and settlement systems, where does Sri Lanka stand compared to other countries in Asia?

Certainly, from a national standpoint, we’re lagging – and I’ll be honest about that. However, when we consider our technical capacity and product capabilities, we’re competitive. It’s a strange dichotomy – we’ve got these high-performing products, but usage is low.

In other markets, where the same products are used, we see explosive growth, with figures soaring to 300%, 400%. Unfortunately, we’ve yet to experience that boom in Sri Lanka, and the reasons for this are multifaceted.

Firstly, regulatory issues – other countries benefit from significant governmental and regulatory pressure to adopt new technologies, which then translate into concrete action from consumers. This is often supported by fiscal incentives for key stakeholders. India, for instance, demonetized certain denominations and banned cheques under a certain limit, which led to a rapid uptake of digital solutions. In Sri Lanka, we haven’t implemented similar measures, and while we’ve seen a significant drop in cheque usage, it’s not completely phased out.

Then, we have QR codes. We’ve introduced them, but their adoption is slow. Multiple factors contribute to this. Firstly, vendors, the key touch points for consumers, remain sceptical about QR functionality. Secondly, banks need to profit from these technologies. An initial push to cap merchant acquiring side fees at 0.5% was met with resistance from banks claiming this wasn’t sufficient to cover their costs. Yet, the intention behind this move was to keep costs low and encourage merchants to adopt this technology, because of the obvious risks associated with handling cash.

We’ve also missed the mark on the education front. We need to improve awareness about the benefits of adopting digital technologies. Discussions with the central bank and other key stakeholders have started, and we’re hopeful of seeing more traction soon. For instance, the recent introduction of fuel QR codes has sparked interest due to its convenience. The next step, which we’re working on, is to integrate a payment mechanism with this service. We’re developing a new product, ‘PayMe’, which will facilitate this process. This will enable users to make payments directly from their app, removing the need to use credit or debit cards. Progress is slow, but we’re certainly moving towards a more digital future.

Any concluding thoughts?

When I first accepted this role, I must confess, I was stepping into the unknown. The path ahead was as clear as an unwritten book. Over the past three years, I believe we’ve written those chapters with diligence and precision. The progress we’ve made fills me with pride. As I’ve often said, it’s a collective effort, and I’ve been fortunate to see how well the team has responded. It’s been an honour to be a part of this journey, and we’re beginning to see the fruits of our labour in our overall growth.

But we’re far from finished. I firmly believe that with time, over the next two years, we’ll gain traction. One of my hopes is that we retain our talent within the country. Talent is vital to our journey. These technologically adept individuals and their skill sets are easily mobile and can be quickly relocated. Losing them puts us in a precarious position.

For the welfare of our citizens and to expand our market reach, it’s crucial that we retain this kind of talent within the country. This is essential if we want to attract other countries to our payment and settlement system, foster meaningful dialogue, and open up a larger market.

As I mentioned earlier, we’ve just scratched the surface of the consumer market. We haven’t ventured into e-commerce yet. Both business-to-consumer and business-to-business models represent different challenges. The latter, in particular, promises significant returns.

Sri Lanka, given its central location, stands to benefit immensely from such entrepreneurial activity and the increased attention of businesses. We already have the necessary infrastructure, including the untapped potential of the port city. The introduction of digital banking licenses will make a big difference, especially now that we have digital signatures and relevant legislation in place.

Now, our task is to ensure that we use these tools wisely and efficiently to reduce our costs, rather than resorting to outdated paper-based methods. If we can manage to execute this transformation successfully, I do not doubt that Sri Lanka will be in a far better position.

 

Why LankaPay is Successful in Sri Lanka and Going Global Makes Good Sense

LankaPay’s senior leadership team, Channa de Silva and Dinuka Perera on its value proposition and why its strategy for building global connectivity is sound

LankaPay has come a long way from its beginnings as an entity that only managed cheque clearing. The arrival of the internet, digital payments and smartphones have transformed the landscape. With technology and a slew of digital products LankaPay has adapted to the changes in payments remarkably well.

LankaPay’s Chief Executive Channa de Silva and Deputy Chief Executive Dinuka Perera delve into the company’s people-centric approach to growth and success and shed light on LankaPay’s plans to build linkages with global payment networks, enabling cross-border transactions and reducing costs associated with international transactions. Apart from creating affordable payment solutions, LankaPay aims to assist other countries in developing the infrastructure and drafting legal and regulatory frameworks for solid interconnected digital payment systems.

Can you share your plans for LankaPay’s global expansion?

Channa: Our initial focus was to establish a domestic network, connecting all financial institutions, banks and finance companies into an interoperable network. This was our first step towards creating a solid foundation. Once achieved, our next goal is to expand and extend the benefits of this network to enable cross-border transactions seamlessly. Our primary target is the Asia-Pacific region, which is experiencing rapid growth in the fintech sector, surpassing the West and Europe. We aim to connect with similar networks in other countries, allowing us to facilitate direct cross-border transactions and reduce the costs associated with international networks.

You mentioned connecting all banks and financial institutions in Sri Lanka. Can you clarify if the connection is at a single level or if LankaPay has established multiple layers?

Channa: We have established connections in different areas. Initially, as LankaClear, we focused on interbank cheque clearing, setting up the network for this purpose. We then expanded into the realm of digital transactions. One aspect was connecting all the ATMs, enabling customers to use any bank’s ATM to withdraw money or check their bank balance.

The next step was establishing digital connections to facilitate real-time fund transfers. This formed the basis of our third network, which involved building the necessary infrastructure.

Currently, our focus is on introducing various products that offer more convenience to users across different channels. Whether it’s through the internet, mobile phones, or other sources, we aim to provide consumers with more options and increased convenience for their financial transactions. Our goal is to continuously enhance the user experience and expand the range of services available to our customers.

As you expand globally and aim to connect with networks in Southeast Asia and possibly South Asia, could you say at which level you seek to establish these connections?

Channa: Our primary focus is on two areas of connectivity. Firstly, we aim to connect ATMs so that customers from one country can visit an ATM in another country and withdraw cash. Currently, such connectivity exists through international schemes, but they come with high costs. Our goal is to establish a cost-effective solution for this cross-border ATM connectivity.

The second area of focus is enabling fund transfers among countries in real time at a minimal cost. We want to facilitate seamless transactions from one country to another and vice versa. However, we have gone beyond that. We recognize the challenges faced by merchants when accepting payments through cards, as the associated fees can be around 3 to 3.5%.

To address this, we have introduced Lanka QR, a QR code-based payment solution. Tourists visiting Sri Lanka from countries like China or India can simply use their smartphones to scan and make payments using Lanka QR. This enables cost-effective cross-border fund flow into the country through the banking system.

Similarly, individuals from overseas can scan a QR code in Sri Lanka and instruct their home country bank to transfer money to the merchant in real time through the banking system. We aim to provide a seamless and cost-effective means of cross-border payments and enhance the overall banking experience for both tourists and merchants.

To expand globally and facilitate cross-border transactions, how has LankaPay adapted its organization, which was initially focused on digitalizing financial transactions and infrastructure within Sri Lanka? What changes or adaptations have been necessary to enable this expansion into international connectivity?

Dinuka: In our global expansion efforts, LankaPay is actively exploring partnerships with like-minded institutions in considering the potential for taking our products overseas. For example, we have a digital signature solution that we are assessing for its viability in other countries, with Nepal being one potential destination. Additionally, we are exploring the possibility of offering our clearing products on a regional basis, providing cost-effective solutions to neighbouring countries.

To embark on this global expansion, we recognize the need for a mindset change within our organization. While we have been focused on building the infrastructure within Sri Lanka, we are now preparing our staff for the journey ahead. We have identified high-performing team members and are investing in their upskilling, providing training in negotiation skills and etiquette, among others. Organizational transformation efforts in talent management and development are also underway to support our global aspirations.

Channa: As we venture into the international arena, we understand the highly competitive nature of the global market. To succeed, we need to operate at a level that is equal to or better than our international counterparts. This requires us to enhance our skills, expertise, technology and reliability. One of the reasons we believe in our potential for success is our focus on consumer convenience. We prioritize providing convenience to consumers, not just in Sri Lanka but also beyond. That’s why we are confident in our ability to take our solutions to other countries as well, ensuring that we can meet the needs of consumers worldwide.

You mentioned the potential for LankaPay to go global in two different tracks: linking the Sri Lankan financial system with overseas networks and taking your products to other markets. Could you provide insight into the current landscape and indicate which initiatives you anticipate succeeding first? What are your priorities in this global expansion journey?

Channa: Our objective in going global is to connect with other networks, which is a relatively straightforward task as we already have existing networks in place. The initial focus is on connecting systems for QR code-based transactions, such as in UnionPay – China, NPCI – India and Fonepay – Nepal where millions of customers and merchants are already using QR codes. This presents a significant market opportunity that we aim to tap into. By establishing each connectivity, citizens of these countries will benefit when travelling between them.

The second step involves identifying market gaps in the target countries. For example, digital loans may be popular in certain countries where we can introduce our solutions. Similarly, technologies like digital signatures may be unavailable in some regions, presenting an opportunity for collaboration and knowledge sharing.

Our approach is not to compete with existing players in these markets, but to form partnerships where both sides can benefit. It’s about finding what works well in each country and leveraging technology and expertise for mutual growth.

Dinuka: In addition to offering our products, we also aim to assist countries in developing legal and regulatory frameworks. We have the knowledge and experience to support them in establishing the necessary infrastructure before implementing such projects. There is interest from South Asian and African countries in exploring how our products can be introduced in their markets.

This endeavour is vast, but it presents a significant opportunity. We have the advantage of having expertise in both legal and regulatory frameworks, as well as the products to support them. We are uniquely positioned to support countries that require such solutions.

You also mentioned that you’d like to do this more as a partnership instead of entering these markets as a competitor. There may be certain areas where you will want to be a competitor with a product but in terms of helping set up ecosystems, your approach will be partnerships.

Channa: Our approach is rooted in the understanding that we are unfamiliar with the markets and territories of other countries. The players in those countries have a better understanding of their respective markets. Similarly, we have a deep understanding of our market in Sri Lanka. Rather than attempting to create a market from scratch, which is a complex endeavour, we believe that partnering with domestic players is a more viable option. This allows us to leverage their expertise, knowledge and market reach, ensuring that both sides can benefit from the collaboration. It is a practical approach, as going alone without a worldwide network of experts would present significant challenges.

As CEO, your role involves considering both current requirements and prospects for the organization. With a focus on the future, what do you perceive as the strengths of your organization? Additionally, what areas do you believe need improvement to achieve global success?

Channa: One of our strengths as an organization is the approach of being a facilitator and enabler rather than reinventing the wheel. We observe what is happening in other countries and adopt successful practices that apply to our context. We believe that many requirements have already been addressed globally and we can learn from those experiences. However, we understand that simply copying and pasting solutions would not work directly in the unique context of each country. Therefore, we localize and adapt those practices to suit our domestic needs. For example, when implementing LankaQR, we adopted the international standard called EMVCo QR and tailored it to work effectively in our country. By following international standards in technology and security and undergoing audits by international organizations, we ensure that our systems are secure, trustworthy and interoperable. This approach allows us to have seamless connectivity both within our country and potentially in other countries as well.

In the face of rapid technological advancements and their rapid evolution from offering a single product or service to building a diverse portfolio, how does LankaPay ensure it stays up-to-date with the changing technological landscape?

Dinuka: Reflecting on LankaPay’s journey, we initially started as LankaClear, primarily focused on manual cheque clearing. As technology advanced, we transitioned into electronic processes. However, cheque clearing remained our mainstay for a while.

When we introduced new digital products, we predominantly relied on our existing staff, with only a few key positions filled externally. It was crucial to motivate and upskill our employees to embrace the new technology. This required extensive training, research and development, and a strong focus on innovation to keep pace with technological advancements.

It wasn’t an easy task, but we are proud to say that our staff rose to the occasion and delivered when it mattered. They adapted to the changing landscape and played a vital role in our successful evolution.

This raises an interesting point about Sri Lanka’s potential to lead the region in the ongoing transformation. From your perspective, what do you believe is the significance of this opportunity? How would you quantify and explain the potential impact on Sri Lanka and the broader region?

Channa: The potential impact of Sri Lanka’s transformation extends in multiple directions. Firstly, amidst the current economic crisis, digital means of enabling foreign exchange can be a crucial solution. We aim to facilitate this through our digital platforms. Additionally, we recognize the market gaps in other countries, particularly in some regions of Africa, where national networks are not yet established. Drawing from our expertise and experience, we can offer advice, assistance and provide customized solutions to set up networks and bridge those gaps.

However, we believe that collaboration and partnership are vital for success. By working together with other networks, we can mutually benefit from sharing our expertise and creating valuable propositions. This approach fosters growth and progress.

Our focus remains on enhancing convenience for consumers through technology. Whether it’s expediting cheque clearing, enabling access to ATMs across banks, or facilitating digital fund transfers, our goal is to provide a level of convenience that surpasses traditional cash-based transactions. By identifying consumer needs, addressing market gaps, and offering simpler and more convenient payment options, we aim to drive a behavioural shift from cash to digital. For instance, our collaboration with FinTech partners resulted in the implementation of one-touch mobile reloads, which saw a significant increase in adoption and met the market’s demand for convenience during the COVID-19 pandemic.

Ultimately, our approach is centred around understanding consumer preferences and delivering solutions that surpass the convenience of cash transactions. We strive to create a positive shift towards digital adoption by offering simpler, more accessible, and user-friendly alternatives.

Can you explain how the underlying technology behind LankaPay is developed and structured – from code to software to integrating APIs, ensuring robustness and security?

Dinuka: At LankaPay, we have consciously decided not to have a software development team. Instead, we collaborate with technology partners and solution integrators to procure state-of-the-art technology products for our services, including our main switch. Our staff is trained to operate these systems, and we rely on the support of our partners to keep the technology up to date. With a team of around 100 staff members, we have achieved remarkable success, surpassing what a small organization typically accomplishes. Our confidence in our technology partners and our staff’s ability to operate these systems have been key to our success.

Channa: Although our staff numbers have only increased by a few members, we have been able to deliver a significant number of solutions. It’s about changing our mindset and thinking outside the box to find innovative approaches. Once the core infrastructure is established, we focus on enhancing the user experience and addressing specific consumer needs. Our products, like JustPay and LankaQR, run on a secure, real-time platform. We adapt and customize the front end of our solutions to cater to different consumer requirements, aiming to it to fit our specific context, considering market requirements and addressing existing gaps. Blindly implementing technology without considering these factors is unlikely to yield positive results. Our approach is driven by a line of thinking that aligns with market needs, and we have confidence in the solutions we have delivered and can deliver in the future. The possibilities are limitless.

Dinuka: Our confidence stems from the local successes we have achieved thus far. Every product we have introduced has been well received, and our ability to adapt has been commendable. We have a strong belief in our talented staff’s capability to deliver. These factors fuel our confidence and position us to compete effectively in any market.

Channa: We’ve achieved remarkable financial results and growth over the past few years, enabling us to reinvest in new developments and innovation.

Towards funding these technology advancements, we have established a technology reserve fund. It allows us to allocate resources and money for new projects and initiatives. Similar to companies like Google, where they develop numerous products and a majority may not succeed, we also take calculated risks through research and development. Although we may not have the same number of developments resulting in a high failure rate as Google, we are proactive in understanding market requirements. We often conduct market research to gain insights and ensure that the solutions we develop truly address the gaps and meet the requirements of the market. This approach has been a key factor contributing to our success.