Fintech emerges as key player in elevating financial literacy in Sri Lanka: Robocash

Robocash’s recent observations underscore the pivotal role of the synergy between financial literacy and fintech in addressing economic challenges for individuals in Sri Lanka. This transformative shift showcases a remarkable improvement from its 2014 level of 35%.

Financial literacy, an amalgamation of knowledge, attitudes, and behaviours crucial for informed financial decisions and achieving financial well-being, stands pivotal in steering individuals toward sound economic choices. It encompasses the spectrum of skills encompassing income management, expense tracking, borrowing, savings maintenance, retirement planning and investment strategies for a prosperous life.

While Sri Lanka boasts a commendable 92% print literacy rate, its financial literacy stands notably lower at 58%. 

This gap hinders access to advanced financial services, impeding the country’s overall financial inclusion. Notably, disparities rooted in gender and regional divides amplify this concern, with women and rural communities particularly vulnerable to low literacy levels.

The discrepancy between genders is apparent, with women, constituting 53% of the population, exhibiting a lower financial literacy rate of 55%, in contrast to men at 61%. Factors contributing to this divergence include lower female labour force participation (33% compared to 71% for men) and traditional roles emphasising household duties, limiting decision-making empowerment in managing household finances.

Additionally, regional disparities add complexity, with 82% of Sri Lankans residing in rural areas facing reduced access to financial services. 

The concentration of bank branches and ATMs in urban centres further exacerbates this divide, leading to varying levels of financial literacy across the population.

Despite these challenges, Sri Lanka has witnessed a noteworthy upsurge in financial literacy, surging from a mere 35% in 2014. 

This progress owes credit to the burgeoning fintech sector. Fintech companies have revolutionised financial literacy through multifaceted approaches. 

These entities cater to the needs of financially underserved individuals through simplified products like mobile wallets, offering intuitive interfaces that simplify financial management via smartphones. Out of 109 active fintech companies, a substantial 24% specialise in payment and mobile wallet apps, ensuring accessibility and user-friendliness. Moreover, fintech firms have pioneered interactive online educational platforms, facilitating access to financial education. Furthermore, initiatives like DhanaMaga, a financial literacy platform by a leading investment firm, employ engaging videos to educate Sri Lankans on myriad financial aspects, from personal finance planning to investment options.

Despite significant strides, several hurdles impede Sri Lanka’s financial literacy growth, including a preference for in-person banking, a lack of trust in digital transactions, limited internet access in rural areas, and the need for consistent regulatory guidance for emerging technologies.

However, fostering financial literacy remains paramount. It not only empowers individuals to make prudent financial decisions but also fuels economic stability and growth. 

Additionally, enhanced financial literacy fosters trust in emerging financial products, which is crucial for the continued development of Sri Lanka’s fintech sector.

In essence, nurturing financial literacy in Sri Lanka holds the key to resilient economic recovery, bolstering financial inclusion, and propelling the nation towards sustained growth.