Comparative Analysis of Digital Transformation in Accounting and Finance: A Case Study of Government and Private Commercial Banks in Sri Lanka

Abstract

Digital transformation has dramatically reshaped the banking sector by enhancing operational efficiency, customer experience, and financial transparency. This study compares digital transformation adoption in state-owned versus private commercial banks in Sri Lanka, focusing on accounting and finance innovations. A qualitative research approach was adopted, and data were collected from the annual reports of 2021–2023 of four leading banks: two state-owned, State Bank A and State Bank B, and two private, Private Bank C and Private Bank D. A thematic analysis was performed to assess digital adoption trends, technological advancement, and regulatory challenges. The results indicate that private banks have a higher rate of digital adoption compared to government Banks, due to investments in AI, blockchain, and customer-focused digital platforms. On the other hand, state-owned banks face the challenge of legacy systems and lower digital literacy, which delays adoption. Key challenges remain in cybersecurity risks, regulatory compliance, and cost-intensive technology upgrades. Hence, the research prescribes that government-owned banks focus more on infrastructure modernization and financial literacy programs, while private banks should align their AI and blockchain adoption with compliance standards. This has important implications for policymakers, banking executives, and FinTech developers as they shape future digital banking strategies for Sri Lanka.