Global Expert Warns Sri Lanka Is Overbanked, Urges Banking Consolidation & Core Reforms 🏦

Key takeaways from 3A Ventures International Director Cyrus Daruwala’s address at 'The CIO Confluence 2026': • Industry Status & Consolidation: - Sri Lanka is overbanked given its static customer base (~21Mn people) and 15–20 active banks. - Local institutions should brace for consolidation, following similar merger trends in Hong Kong, Singapore, and Malaysia. • Operational & Financial Priorities: - Local banks must fix core fundamentals: legacy systems, payment ecosystems, and data monetisation. - Profits sit in loan origination and payments, while net interest margins are becoming commoditised. • AI Adoption Reality Check: - Uncoordinated AI investments risk zero ROI; spending locally is justified purely for process efficiency, not revenue growth. - Recommended approach: Form AI steering committees, buy/customize solutions over building in-house, and benchmark against regional best practices due to local tech talent constraints. • Security & Risk Factors: - Banks must prepare for explainable AI to handle regulatory challenges regarding AI loan rejections. - Emerging quantum computing capabilities present serious cyber security threats to encrypted transaction data.