Only around 17% women were able to take credit from the banking sector last year while 80% of borrowings of women were from the informal sector, World Bank Country Director for Nepal, Sri Lanka and the Maldives Dr. Idah Pswarayi-Riddihough said.
She made the keynote speech on the theme “Challenge of disruptive change: Together Towards Tomorrow” at the 31st Anniversary Convention of Association of Professional Bankers of Sri Lanka.
Riddihough said that having a bank account isn’t enough; it must be used. “The challenge in Sri Lanka is less about the unbanked; it is more about the under banked, especially the women.”
According to International Finance Corporation (IFC), the number of individuals who reported no deposits and no withdrawals in 2017 was 31%i n Sri Lanka.
“Moreover, less than 15% of SMEs and less than 1% of MSMEs use any form of insurance, which leaves businesses and individuals at greater risks.”
She said that banks should be seen as development enablers. Banks can enable development through different means, such as designing innovative loan schemes for entrepreneurs and supporting financial literacy and digital ecosystems in the development of new data-driven business models.
“At the World Bank, we believe that the private sector has a critical role to play in supporting this transition and those disruptive technologies can help accelerate development in the 21st century.
In the banking industry, disruptive change could be caused by new regulations, changes in consumer preferences, or the introduction of new technologies. “The banking sector is one of the industries that could have a strong leapfrog effect on development, if it acts adequately as both driver and enabler.”
“The banking industry is rapidly evolving as new trends and disruptive technologies continue to reshape the sector. Fintech players are challenging the status quo with new operating models. Banks are critical actors for financial inclusion and, in Sri Lanka, banks have done a tremendous job in promoting it.
The density of bank branches in the country currently stands at 18.6 branches for every 100,000 adults. And about 83% of the adult population has a bank account, with women recording a similar penetration rate, unlike many other South Asian countries. “While banks are pushing the digital transformation in their sector, it seems that Sri Lankans still prefer to bank at their local branches, which are often a part of their own communities. This should come as no surprise in a country where over 80% of the population lives in rural areas.”
“When we look at the broader picture, we find that mobile phone connectivity and web traffic is growing.”
According to GSMA, over 70% of the population has a mobile connection, and 90% have 3G mobile network coverage. “In other words, even though the adoption of digital financial services in Sri Lanka is relatively slower than in other countries, it is on its way.
A good example of disruptive change that is being experienced the world over is climate change.
She said that it’s interesting to note that it’s neither the scientists nor the development agencies but it is the children who have understood that this disruptive change will matter more for them than for our generation.”
The transition towards a green economy also needs to be private sector-led. But the private sector requires enabling regulation, policies and access to reasonably-priced financing.
“To that end, I would like to acknowledge the Central Bank leadership in the country’s green transition.” The World Bank Group, through the IFC, has been supporting this initiative. She identified digital transformation as another disruptive change. The World Bank, together with its client countries, is seeking to better understand how it can leverage this digital transformation to accelerate development in its client nations.
Some say we are approaching the Fourth Industrial Revolution where technology will alter the way we live and work. With disruptive technologies moving at the pace at which we are seeing today, there is no doubt that the jobs of tomorrow will be different. “If we are to provide youth with the jobs of the 21st century, we must invest in our human capital. Sri Lanka has made significant progress in its development indicators, often outstripping other South Asian countries.”
“However, according to the World Bank’s recent Human Capital report, Sri Lanka performs only moderately well globally, with an overall score of 58 percent, and a ranking of 74 out of the 157 countries included in the Index.”
In other words, if current education and health conditions persist, a child born in Sri Lanka today will be a little more than half as productive (58% as productive) in comparison to some other countries. The report also notes that 13 years of schooling in Sri Lanka is equivalent to what a child in Singapore would complete in 8 years.
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