Behavioural intentions toward neo-banking adoption in Sri Lanka: analyzing institutional perspective

Abstract

Neo banking represents a transformative shift in the global banking industry, offering digital-first services without the need for physical branches. Similarly, in the Sri Lankan context, although there is a rise in tech-savvy digital customer groups and competition from non-banking institutions offering innovative financial products and services, fully digital banking platforms, such as neo-banks, are still relatively new concepts that remain unexplored. In addition, with the Sri Lankan government introducing laws to transition towards a cashless economy through the Digital Framework 2030, the adoption of neo banking becomes essential for building a fully integrated cashless ecosystem. This results in the need to study the implications of the adoption of neo-banking in Sri Lanka. Accordingly, this research aims to identify the current situation of the Sri Lankan banking industry to introduce neo-banking from an institutional perspective. This study adopted an interpretivism research philosophy, employing a qualitative approach. The objective of the study was achieved by conducting in-depth interviews with key personnel within the top management of domestic commercial banks and fintech companies on the topic of digitalization, selected through purposive sampling. The data were analyzed using a thematic analysis approach using NVIVO software. The study finds that while digital transformation in Sri Lankan banks is advancing, its success hinges on aligning technology with customer needs, fostering fintech partnerships, and overcoming barriers such as regulatory constraints, uneven technological readiness, and gaps in digital literacy. This study emphasizes that embracing digitalization is essential for financial institutions to remain competitive in an increasingly digital-first economy. To this end, the study highlights the need for banks and policymakers to identify and address barriers and enablers to neo-banking.