Sri Lanka’s cooperative banks are community-owned financial institutions: they serve four million rural people, hold Rs300 billion in deposits, sit entirely outside the Central Bank’s regulatory perimeter, and until recently had no digital infrastructure of any kind. The company that’s working to change that is not based in Colombo. Nanosoft Global operates out of Kurunegala — and last year signed its first international contract with a cooperative bank in Malaysia. It has digitised more than 500 cooperative banks, serves two million customers, and in June is launching a debit card that will give those customers ATM access for the first time.
Nanosoft Global found this market before it raised money to enter it. By 2020, it had digitised 100 cooperative banks across six provinces, without a cent of external funding. It was 2 years later that it raised $80,000 for a 15% stake from Singapore-based venture firm nVentures, valuing the company at just over $500,000. It has remained profitable, according to Chalinda Abeykoon, managing partner of nVentures.
Sanjeewa Pathirana, Founder and Chief Executive at Nanosoft Global, discovered the market after a rejected loan. In 2016, he walked into a commercial bank and was told: “You don’t have any transactional history with us and you don’t commit any salaries to one of our accounts, so we can’t grant you a loan.” A contact suggested a cooperative instead. He went, found a member to vouch for him, and the loan was approved. While he waited, he noticed the staff struggling with their own system.
What is a cooperative bank?
Cooperative banks operate differently from every other financial institution. They are owned not by outside shareholders but by the communities they serve. Anyone within the cooperative’s geographic region can apply and, after making a deposit, becomes a member: a part-owner of the institution, with an equal vote in how the institution is run regardless of the size of their deposit.
In Sri Lanka, 8,500 of these institutions in the banking sector serve communities that commercial banks have not reached. They are governed not by the Central Bank but by the Department of Cooperative Development, a ministry-level body under the Ministry of Trade.
“Cooperative banks operate with nuances that a standard banking system was never designed to handle — and the software that was had been built in the 1990s and abandoned by its vendors.”
Their legal structure reflects that community ownership. Each cooperative bank is an independent organisation, registered separately under Sri Lanka’s Cooperative Societies Law of 1972. Most carry limited liability, meaning member exposure is capped at the value of their share contributions. Capital comes primarily from those members through savings and share purchases; the only outside funding cooperatives take is loans from commercial banks, borrowed solely to on-lend to their own members.
The returns reflect that ownership too. When a cooperative generates a surplus, members share in it in proportion to how much they transact with the institution — how much they save, borrow, and repay — rather than how much they own, according to the International Cooperative Alliance. Cooperative banks also operate under their own reporting formats, distinct from standard Sri Lanka Accounting Standards, which the Department of Cooperative Development checks before approving any technology provider to deploy in the sector.
That structure has a cost. Sitting outside the Central Bank’s regulatory perimeter, cooperative banks fall outside the national deposit insurance scheme — their members’ savings carry no government protection. Most have run on paper ledgers and outdated software for decades, unable to introduce new products or compete with commercial banks on digital services. The sector has operated this way since 1905.
For the communities dependent on it: no ATM access, no mobile banking, no way to check a balance without visiting a branch.
What Smart COOP does differently
Pathirana saw it while waiting for his loan.
“They were working with some software and struggling with it,” he said. “I asked what the problem was. They said it was developed in the 90s and the vendor hadn’t updated it.”
He went home and built an alternative, without having done any market research. He ran a pilot for two months. Only after it worked did he realise the scale of what was in front of him: 8,500 institutions across nine provinces, all running on the same ageing infrastructure. He recruited three engineers at a competing firm, who had been trying to solve the same problem. Together they incorporated Nanosoft Global in 2018 in Kurunegala.
What they built is called Smart COOP: a core banking platform, a mobile app for cooperative members, and a field collection tool for officers who follow daily routes through rural communities. Cooperative banks operate with nuances that a standard banking system was never designed to handle — and the software that was had been built in the 1990s and abandoned by its vendors. Field officers have always followed daily routes through rural communities, visiting members at homes and workplaces to collect deposits and process withdrawals; Smart COOP made those transactions real-time, with an SMS confirmation reaching the customer before the officer has left the doorstep.
Share accounts — the fixed-value instrument through which members hold their ownership stake — were another feature no standard platform was built to manage. Smart COOP was also built to meet the distinct reporting formats that the Department of Cooperative Development requires.
Before Smart COOP, a member visiting a cooperative branch waited twenty to thirty minutes while staff located the physical ledger, found the account, and calculated figures by hand; the transaction itself took seven to ten minutes. After digitisation, the full visit takes under seven minutes and individual transactions are completed in two to five minutes. Calculation errors, previously routine, are now zero.
In June 2023, FMO, the Dutch Entrepreneurial Development Bank, commissioned an independent study of 125 Smart COOP users across Sri Lanka as part of its Reducing Inequalities Initiative. One in three respondents had never used a financial app before Smart COOP arrived. 78% reported an improvement in their quality of life. 67% said their ability to achieve a financial goal had improved. The most common reason cited was time.
Building the business
The company’s growth came in two speeds. Nanosoft Global introduced SMS banking for cooperative members in 2018, the first time the sector had offered it. A mobile banking app followed in 2019, another first, alongside a government tender to digitise 36 institutions in the Southern Province and selection for a PayPal and MetLife Foundation accelerator in India. By 2020 it had digitised 100 cooperatives. Then in 2022 it raised its seed round from nVentures. That same year, Nanosoft added another 100 cooperatives.
Building the business required solving problems that had nothing to do with software. Every cooperative’s records were on paper — decades of them, handwritten. The oldest institution they have digitised had been operating for roughly 95 years. “The main challenge was getting those records into our platform,” Pathirana said. “The handwriting meant OCR wasn’t working. We had to manually type each and every name, each and every transaction. Even today, we do that.”
The staff presented a different order of challenge entirely. “We’ve seen people who don’t know how to turn on a computer,” Pathirana said. “We’ve done training programmes covering everything from A to Z, such as how to turn on a computer, how to shut it down before switching off the UPS.” That training is still part of every deployment.
Language presented a third constraint. Nanosoft Global initially built Sinhala interfaces into Smart COOP but stopped after observing that cooperative staff preferred the English interface. “We felt it would help them,” Pathirana said, “but even though sometimes they can’t read the full text, they understood how the system works in English.” The interface was one thing; the reporting requirements were another. Official reporting to the Department of Cooperative Development must be in Sinhala, and in the Northern and Eastern provinces, where that reporting must be in Tamil, Nanosoft Global has no presence.
“Building the business required solving problems that had nothing to do with software. Every cooperative’s records were on paper.”
Selling the model required patience of a different kind. Cooperative managers did not think in subscriptions. “Let’s say I sell you a bottle of water,” Pathirana said. “You give me Rs50. So you might ask, why would I pay Rs10 every month for a bottle of water? That is the mindset.” Nanosoft Global structured its pricing as an upfront licence fee followed by an annual maintenance contract, the same economics, in a form the market could accept.
The next market
Late in 2025, a cooperative in Malaysia called Koparasi Suriya Berhad wrote to Nanosoft asking about digital banking solutions. “At first I thought this looked like a spam email. I didn’t even reply,” Pathirana said. A WhatsApp message followed: “You have bad service. You didn’t reply to our email.” He replied, met the cooperative’s head in Colombo, flew to Kuala Lumpur, and in 2025 Nanosoft Global signed its first international contract at Disrupt Asia.
Malaysian cooperatives, he found, are governed by the same ministry-level structure as Sri Lanka’s, carrying the same infrastructure gap and serving the same communities that formal banking has not reached. The cooperative banking problem, it turns out, is not unique to Sri Lanka.
One gap remained at home. Cooperative banks cannot legally issue debit cards. Nanosoft Global’s solution is a co-branded card issued through HNB, one of Sri Lanka’s largest licensed commercial banks. HNB is the legal card issuer. The member sees a cooperative-branded card connected to LankaPay’s network of ATMs across the country and overseas.
It launches in early June. It is a small piece of plastic — and the first time, in 120 years, that a cooperative bank’s member can walk up to an ATM and withdraw their own money.