Sri Lanka’s financial system is facing heightened vulnerability to sophisticated cyber threats due to a stark divide in how local banks adopt artificial intelligence and manage digital risks, the International Monetary Fund (IMF) said.
IMF technology chief Shirin Hamid made these remarks during the seventy-sixth anniversary oration of the Central Bank of Sri Lanka in Colombo, urging authorities to build an intelligent central bank capable of safeguarding public confidence against evolving digital risks.
Data from the central bank reveals that while thirty-one percent of licensed banks have integrated artificial intelligence into live operations and thirty-eight percent are conducting pilot projects, thirty-one percent have taken no steps toward adoption.
More critically, a mere eight percent of financial institutions have established dedicated board-level committees to manage risks linked to automated systems.
This governance gap emerges as deepfake fraud, voice cloning, and self-learning cyberattacks challenge traditional security controls and identity verification systems across the country.
Concerns are also growing over the banking sector's heavy dependence on a limited number of global cloud providers, which creates systemic exposure to common digital infrastructure failures or coordinated cyber disruptions.
To counter these vulnerabilities, Central Bank Governor Nandalal Weerasinghe is advancing regulatory technology to enhance anti-money laundering enforcement and detect illicit financial flows in real time.
The central bank is also drafting a comprehensive supervisory framework that enforces board-level accountability for algorithmic outcomes and guarantees human oversight for critical automated decisions.
Furthermore, the IMF has recommended market-wide cyber stress testing and stronger international regulatory coordination to prevent algorithmic contagion across domestic financial institutions.
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