A Way Forward

A Way Forward
The ways customers are engaging in business and the financial transaction has shifted rapidly in the last
few months. Banks these days need to ensure continuity in business and keep concurrence with the
changing ways of customers and balance the business priorities. Covid-19 has triggered the need for
modern banking technology although it wasn’t responsible for creating it.
Although there has been competition amongst Banks and Financial Institutions (BFIs) to deliver modern
banking services, the majority population in the country has no access to such services. Research done by
Nepal Rastra Bank presents that only 15% of salaried employees receive payments through the bank
account, 16% has used the digital payment solution in one or either way, only 9% of Nepali own Debit
cards, and 1% own credit cards. Where a developed country does the financial transactions almost
through digital payment solutions, it is evident that we are far more behind to catch up with the pace of
digital transformation. The accumulation of BFIs in urban areas is the reason for this. Modern banking
services are available only in urban areas, and even basic banking services are deprived of the majority of
people in rural areas. Banking fees, low levels of literacy and inaccessibility of bank services in rural
areas due to weak infrastructure are considered as low digital banking services. Similarly, the
underdeveloped ecosystem of digital financial services with low penetration of card transactions, low use
of digital payments, online and mobile banking, and restrictive government policies are believed to hinder
the projected growth and adoption in Nepal of digital banking and payment services.
Nepal is well placed to benefit from digital financial services, with an impressive internet penetration rate.
Such solutions (mobile banking, Online banking, mobile wallets, etc.) have the ability to overcome
problems such as difficulties accessing banks and high service costs. An important part of driving all
facets of the economy is the growth of the digital financial services ecosystem.
Banking and Financial Institution in Nepal are slow-paced although the government and the central bank
are committed to enhancing financial inclusion through digitization of banking services. The conventional
financial system is no longer a mandate of banking institutions due to innovation and application of
technology in delivering products and services. New players such as Fintech have emerged as a strong
force in delivering financial services through technology-based products and delivery channels. A post
Covid data on usage of TMS online portal shows that transactional value skyrocketed to 9 billion in a
single day without the user physically visiting the broker office since the payment system was made
convenient through connect-ips digital payment. This was only possible only after the customers were
made aware of the benefit of the digital system. Digital banking can serve the customers who don’t have
access to physical branches. Siddhartha bank, having its digital financial services tools like iconnect
interactive internet banking website, Banksmart- Mobile banking application and Hello Paisa- Branchless
Banking solution, can reach to remotest part of the country through similar programs like FLP. Bank can
also incorporate such programs as a part of its corporate social responsibility. In addition, bank can take
an advantage of digital technology to cater the complete accounting and financing needs of corporate
organizations reducing the operation cost turn-around time.
Technology has the potential to offer unprecedented speed and convenience in banking. In the next ten
years, there will be tangible changes and innovations in the banking system in terms of the new
automation, artificial intelligence and machine learning, instruments, new process, and more leverage.
But the banks that thrive in the future will be those who match great tech with thoughtful risk
management and, above all, excellent customer experiences. One of the most profound shifts that the
financial sector must keep an eye on to remain significant is the change in consumer behavior. Millennials
are becoming largest group based on age in the next few years, and retail banking providers should
carefully note their attitudes and desires as they reach middle age and raise their purchasing power. Bank
should consistently revamp the products and services to accommodate the financial behavior of this
generation. Also, the bank having the first-hand implementation of newest digital technology is sure to
gain momentum more quickly and has a sustainable grip over the market. Today, the burgeoning need of
convenient payment solution has placed Fintech companies as disruptive player in the industry. The
surging use of these payment solutions in the global scenario suggests Fintech will be indispensible in the
coming years. Given that larger banks have more complex operating models, organizational structures
and processes, competing with new, agile challengers with simple models, oriented product offerings and
a more streamlined customer experience that is unencumbered by legacy systems, procedures and
compliance undertakings can be difficult. Partnering with fintechs to drive innovation has become an
increasingly embraced strategy for global banks in recognition of these problems, a pattern we are now
beginning to see emerge in the local financial services landscape.
The Central Bank’s emphasis of digital banking and electronic payments through introduction of
monetary policy has opened windows of opportunity for commercial banks to attract the customers to
banking technology. With various initiatives like expansion of digital banking, International and National
Payment Gateway, online tax payment service in existence, partnering with Fintech to innovate in
existing products, channels or processes, to launch new products and services, and develop new business
models and revenue streams can be revolutionary move to weather the next financial storm. Sidhhartha
bank with its already linked basic services with the local payment gateway such as IPSconnect and
fonepay can readily add new services to reach the next generation of customers which was largely
dependent on cumbersome manual procedure. Conducive to paperless banking system, Fintech helps to
maintain

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