Sri Lanka’s banking system would have to shift towards the peer-to-peer system adopted in banks worldwide, Chief Operating Officer, Sampath Bank, Aravinda Perera said last week.
The observation was made during the sessions at the LBR-LBO Summit held on July 14 under the theme ‘Sri Lanka – Technology Drives Disruption: Embrace or Face Extinction’ focused on the emerging trends and changes in the corporate sector and how various sectors could adapt to the changes.
Perera who was a participant at the first session stated that even though institutions such as banks had limitations in causing disruptive innovations as they were regulated.
He, however, stated that as a bank, they were still able to make inroads in several aspects such as being the first to move towards automated teller machines and introduce credit cards in Sri Lanka.
The event was represented by experts from various sectors including banking, online marketing, apparel industry, etc.
The sectors present at the event discussed in depth on adapting to the changes while also being the source of change in the market.
Adapting to changes
The banking sector, which dealt with hard cash, has eventually moved towards credit and debit card systems.
Perera said as far as the banking sector was concerned, the world was moving towards peer-to-peer banking system.
This online banking system allows individuals to take part in financial transactions with one another by using an auction style process that lets members offer loans for a specific amount and at a specific rate. In addition, buyers have the option to look for an amount and rate of interest that meets their needs.
“We have received proposals to embark on such a system and banks will have to move towards that in the future,” he said.
However, in terms of disruptive innovations, Perera stated that it was difficult to banks, and other financial institutions to go towards such changes as they were regulated. “As regulated institutions, it is quite difficult for us to do that,” he said.
The customer point of view
Another aspect of these changes is to cater to the needs of the consumer. While certain organizations are content on supplying according to consumer demands, many look to introduce new products and services that would create a new market.
CEO, Duo Software (Pvt) Ltd, Muhunthan Canagey speaking at the sessions on adapting according to the shift in technology stated that there needed to be a balance in between the legal frameworks and regulations and added that it was important to assess whether the people were ready for the change.
Co-founder and Chief Executive, Leapset, Mani Kulasooriya however told the session that entrepreneurs had to make the initiative and decide what to give the consumers. “In most cases, the consumers do not know what they want,” he said. However, he added that the consumers were ready to accept the changes and the usage of new methodologies, which needed to be capitalized by the companies.
The disruption innovation explained
Board Director, Brandix, Udena Wickremesooriya, who kick started the second session of the event explained the disruption innovation using the simplest of examples, the shift from gramophone to digital music.
He stated that shift gave a new experience to the audience who were eventually able to personalize their playlists according to their musical tastes and desires.
However, despite the changes, the cost at which the consumer purchased the said product had been reducing.
However, Wickremesooriya pointed out that the digital era, while being beneficial for consumers, it was not so for producers because of increase in copyright infringements. “This has prompted the producers to go back to the old style for data protection,” he said.
Fate of those who failed to adapt
An interesting example of disruptive innovation was the shift from film based photography to digital photography. Wickremesooriya cited the example where the once famous photographic film producer Kodak was compelled to declare bankruptcy as it failed to shift towards the digital era, while its competitor Fujifilm managed to sustain as it was smart enough to adapt to the shift.