Sri Lankan Fintech Dream written by Swati Jindal
As my plane touched down in Colombo, I was full of curiosity about my neighbour. For the longest time, India has had a blow-hot-blow-cold relationship with Sri Lanka over, well mostly political issues.
Now with a new government at the helm and a dynamic foreign policy, India is re-examining its relationship with her neighbours. Transformation starts at home, just like charity and which place better to start than your own neighbourhood. While this might have been forced by the proximity between China and Sri Lanka, for India it’s better late than never.
With beautiful, serene surroundings that reminded me of Goa in India, the mood was set for some exploration of the country’s banking and fintech initiatives.
Whilst attending the BankTech Asia event in Colombo, I listened to some of the leading and forward thinking minds in Sri Lankan banking, I kept marveling at the pace at which Sri Lanka has rebuilt itself since the end of the conflict.
However, Sri Lanka does realize that the journey from this point on is fraught with challenges like financial inclusion, less cash economy, support and sustenance of development initiatives amongst many others. Having lived in an era where India has gone through this all, I know it’s not going to be easy for the government nor the people of Srilanka - but it is going to be so worth it!
I have been to fintech events and conferences in India and I sometimes feel that we are gloating about our achievements more than necessary. The event in Sri Lanka made me realise the value of humility and the power of curiosity. Sri Lanka is aware of the fact that there is a lot to be learned and done whilst they are taking baby steps. They are not looking to mature markets like UK and USA but rather observing similar demographics, similarly placed states that can be related with and thus emulated. India, therefore, makes a prime candidate - at least within the banking milieu.
While the Indian banks have made a foray already, the time is ideal for fintech firms to expand into Sri Lanka.
The advantages of doing so are manifold:
- The convenience of logistics- starting with a 3hr flight from Mumbai or 1hr flight from Chennai with visa on arrival!
- Similar demographics (drastic customization not required)
- Favorable and flexible regulation
- Limited competition
VISA in Sri Lanka is pushing rather aggressively as you can see with the card penetration of around 75% but the card usage of 4% is a rather worrying aspect for them and for the government. The banks are aware of the challenges and shortcomings, hence fintech partnerships are happening at a rapid pace.
In my personal experience, when I drew money using my VISA debit card from India in Sri Lanka, I got charged a whopping LKR500 and another INR 200 for a transaction of LKR 20,000.
That kind of transaction charge is unthinkable in India and I think that in itself is a victory for the Indian fintech ecosystem - and yet a huge opportunity for Indian-based fintech firms to spread their wings into the Sri Lankan market.