Exploring The Impact of Digital Innovation in The Modern Commercial Banking Industry in Sri Lanka: A Comparative Perspective with Finland Banking Industry.
Mallikarachchi, Damith (2025)
2025
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-2025120633227
https://urn.fi/URN:NBN:fi:amk-2025120633227
Tiivistelmä
This study explores how the digital innovation has influenced the performance of commercial banks in Sri Lanka by conducting a comparative study of the developed digital banking landscape in Finland. This reserch was done during June to November on 2025. The study has used a mixed-methods approach to combine both a quantitative examination of survey results related to 52 banking professionals and qualitative findings obtained during five in-depth stakeholder interviews which include a Finnish banking professional.
The quantitative results demonstrate that the variables of digital innovation account for about 58 percent of the dependent variable performance in the banking industry (R 2 = 0.579, F = 15.796, p = 0.001). Regulatory and institutional support is the most predictive ( 0.557, p < 0.001) of performance than digital technology adoption, risk management practices and customer engagement channels. There are significant links between the practices of risk management and the adoption of technology (r = 0.656, p < 0.001), as well as between the regulatory support and customer engagement (r = 0.687, p < 0.001).
Qualitative analysis has discovered nine key themes such as different conceptualizations of digital innovation, slow adoption trends, efficiency in operations, customer engagement change, cybersecurity centrality, and financial inclusion, regulatory environment evaluation, performance measurement depth, and global competitiveness issues. The Nordic comparison indicates that there is a high level of maturity in regulatory frameworks, digital infrastructure as well as ecosystem sophistication gaps.
The study finds that to make digital transformation in the banking sector of Sri Lanka successful, there must be extensive regulatory frameworks based on the principles of PSD2, faster digital infrastructure evolution, mobile-first provision of services, and automated systems of tax collection. The most prominent are the introduction of open banking law, regulatory sandboxes, updating core banking infrastructures, central digital income registers, and the improvement of financial literacy initiatives. These conclusions are evidence-based policy suggestions to policymakers and banking leaders going through the digital revolution in emerging economies.
The quantitative results demonstrate that the variables of digital innovation account for about 58 percent of the dependent variable performance in the banking industry (R 2 = 0.579, F = 15.796, p = 0.001). Regulatory and institutional support is the most predictive ( 0.557, p < 0.001) of performance than digital technology adoption, risk management practices and customer engagement channels. There are significant links between the practices of risk management and the adoption of technology (r = 0.656, p < 0.001), as well as between the regulatory support and customer engagement (r = 0.687, p < 0.001).
Qualitative analysis has discovered nine key themes such as different conceptualizations of digital innovation, slow adoption trends, efficiency in operations, customer engagement change, cybersecurity centrality, and financial inclusion, regulatory environment evaluation, performance measurement depth, and global competitiveness issues. The Nordic comparison indicates that there is a high level of maturity in regulatory frameworks, digital infrastructure as well as ecosystem sophistication gaps.
The study finds that to make digital transformation in the banking sector of Sri Lanka successful, there must be extensive regulatory frameworks based on the principles of PSD2, faster digital infrastructure evolution, mobile-first provision of services, and automated systems of tax collection. The most prominent are the introduction of open banking law, regulatory sandboxes, updating core banking infrastructures, central digital income registers, and the improvement of financial literacy initiatives. These conclusions are evidence-based policy suggestions to policymakers and banking leaders going through the digital revolution in emerging economies.