Digital Banking in Nepal Status and Forward Steps
Introduction to Digital Banking
Digital Banking in Nepal is a new phenomenon to the traditional banking process. Customers are becoming prone to getting convenient services from the bank. The expectations of banking customers are changing where the customers expect to get every banking service more conveniently. Banking and Financial Institutions, governments, and customers are actively stepping forward for a seamless banking experience and solution. The digital transformation and less paper-banking model over the traditional banking processes have enabled banks to deliver customer-centric services.
Digital Banking is the automation of traditional banking that enables customers to access banking services using online and electronic platforms. It is a digitized approach to eliminate the foot visit inside a brick-and-mortar bank.
With the speeding information technology and innovation, traditional banking is shifting towards a modern banking approach. Technology has become an integral part that facilitates the banking structure, functionalities, customer-centric services, digital payments, etc.
Digital Banking in Nepal
The Digital Banking transition took a long period in the context of Nepal. Banking in Nepal started off with Nepal Bank Limited established in 1937, the first commercial bank of Nepal. In 1990, modern banking started in Nepal with the introduction of credit cards by Nabil Bank. Likewise, Himalayan Bank introduced ATM and credit cards in 1995. After that, Kumari bank incepted Internet Banking in 2001. In 2004, Laxmi bank introduced SMS banking and launched the mobile banking platform “Mobile Khata” in 2012.
The total deposit account in banks and financial institutions is 3.46 crores excluding deposits in Microfinance Institution, as of Poush end 2077. There are 27 Commercial Banks, 18 Development Banks, 20 Finance Companies, 74 Microfinance, and 1 Infrastructure Development Bank operating as of Mid-April 2021. The total number of Mobile Banking and Internet Banking customers as of Mid-Jan 2021 is 1.26 crores and 10.90 lakhs respectively.
Over the past two decades, the digital banking scenario elevated along with improvements in information technology. Internet penetration expanded to 82.79 percent of the population in mid-Jan 2021. With the internet penetration expansion and the rise of smartphone users, digital banking in Nepal is gradually leaping over traditional banking.
This exhibits that Nepal is thriving towards a digital economy envisioned according to Digital Nepal Framework.
Fastbank – A Comprehensive Omni Channel Digital Banking Solution
Banks are pacing up with the new technologies to create a supreme customer experience. With the implementation of Omnichannel Digital Banking, customers can achieve seamless and consistent interaction with any BFIs. Fastbank is one of the comprehensive Mobile and Internet Banking Solutions in Nepal. Fastbank – Omni Channel Digital Banking Solution is already in operation in Global IME Bank. Developed jointly by SmartChoice Technologies (SCT) and Swift technology Pvt. Ltd., Fastbank enables customers to access banking services in real-time and banks to stand ahead in the competition.
Digital Banking Benefits
The global pandemic accelerated the digital banking prospects in Nepal which led to closely understand the importance of Digital Banking. We all have sensed the need and importance of digitizing our financials with the use of digital platforms.
Benefit to BFIs
- Cost optimization through internal process automation
- Eliminate the paper process errors
- Reach to broader customers along with customer-centric solutions with improved CRM
- Improved customer satisfaction with the adoption of real-time services.
- Enhanced security from extra layers of security.
- Enable Third-Party services through API.
Banking customers are getting more prone to digital services. BFIs never settle to educate and aware customers of the importance of Digital Banking.
Benefit to Customers
- Customers can bank from anywhere and anytime. 24/7 access to personal accounts.
- Control over your finances in real-time.
- Enjoy rich features offered by mobile and internet banking. ( Fund Transfer, Bill Payment, Online Cheque Deposit, Mobile Top Up, QR Payments, e-KYC, Consistent UI/UX, etc.)
- Transaction errors are minimized.
- Eliminate the burden of visiting brick-and-mortar banks.
Digital literacy and urban-centric infrastructure development are the main setbacks for the growth of digital banking. The government and private sectors must collaborate to mitigate such setbacks.
Security risks and fear of loss seem to be other confronting challenges for digital banking expansion. External security threats from hackers and even internal expose and publish of customers data from fraudulent employees becomes a bottleneck.
Moreover, unavailability of easy access to banking services in rural areas hamper the growth of digital banking.
The future of digital banking and payment in Nepal seems promising. Government initiatives for ICT development according to the budget announcement 2077/2078 are optimistic. Budget allocation in the ICT sector to improve the digital ecosystem has encouraged all for online payments and build digital habits. Implementation of Nepal Payment Switch from coming year, VAT benefits on QR Payment, QR code integration into the passport, broadband internet via Rural Telecommunications Development Fund (RTDF), free SIM card for students above 16, 4G across the country to the local level, portal for e-learning, government services integration in Nagarik app, etc. plays a significant role in digitizing Nepal.
Swift Technology Pvt. Ltd.
3rd Floor, IME Complex
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