Short-term ROI no longer enough for banks, says CB Governor

• Asserts traditional ROI metrics are no longer sufficient in a financial system facing rapid technological change
• Says capital must be allocated to high-potential experiments, even if immediate ROI is uncertain
• Stresses digital transformation must be treated as a core financial strategy, rather than an IT initiative
• Points out climate risks are financial risks

Dr. Nandalal Weerasinghe

By Shabiya Ali Ahlam
Sri Lanka’s banks must rethink how they deploy capital, moving beyond a narrow focus on immediate financial returns to a “return on learning” approach that prioritises experimentation, data capability and long-term resilience, Central Bank Governor Dr. Nandalal Weerasinghe said, as climate risks and digital disruption increasingly shape financial sustainability.
Dr. Weerasinghe noted that traditional return on investment (ROI) metrics are no longer sufficient in a financial system facing rapid technological change and growing exposure to 
environmental shocks.
“We have to shift from ROI to ROL, return on learning, where capital is allocated to high-potential experiments, even if the immediate ROI is uncertain,” he said addressing National Conference in Banking and Finance 2025, organised by the Institute of Banking Sri Lanka.
According to the monetary watchdog chief, digital transformation must be treated as a core financial strategy, rather than an IT initiative, as learning-driven investments enable the banks to adapt faster, reduce information gaps and make more informed strategic decisions.
The ability to learn from data, rather than simply automate the existing processes, will determine whether the banks remain financially sustainable in a connected and volatile global economy.
Dr. Weerasinghe went on to directly link the need for a learning-centred investment mindset to climate-related financial risks and noted that the environmental factors are already influencing asset values, credit performance and long-term stability.
“Today, sustainability is not just a moral responsibility. Climate risks are financial risks.”
He called on the banks to build the analytical and technological capacity to identify, measure and manage climate exposures across the portfolios. Failure to do so could weaken the balance sheets and undermine investor confidence, he cautioned.
Digital tools play a critical role in modelling climate risks, tracking environmental impact and meeting the growing demand for transparency from regulators, investors and customers. The investments guided by ROL help the banks unlock the full value of digital transformation, from advanced analytics and artificial intelligence to real-time data processing.
“The goal has to be a data-centred management system where financial, operational and customer data are unified for quality, real-time decision-making,” Dr. Weerasinghe said.
Such capabilities, he said, allow the banks to forecast risks more accurately, allocate capital more efficiently and respond swiftly to the changing market and environmental conditions. 
Meanwhile, he added that digitalisation also supports the sustainability goals by improving traceability in green financing, reducing waste and operational inefficiencies and attracting a growing pool of green capital, often at a lower cost of borrowing.