The world is becoming a digitalization so for every bank and financial institution there is an opportunity to move from traditional banking to online banking where they can use the alternative channel for transactions like mobile banking, internet banking, branchless banking, RTGS, connect-IPS, electronic cheque clearing, mobile wallet and so on.
The concept of promoting digital banking is to implement a digital economic model for every country so that there would be an accessible banking platform for everyone.
With the more number of a participant in the digital sector, there is possible of financial inclusion for all therefore in order to implement financial inclusion model by the bank and financial institutions, it has introduced an innovative approach that is cheaper, reliable and alternative to traditional branch-based banking called as branchless banking.
It can be used to increase access to financial services to un-banked communities. Branchless banking is beneficial for every customer as it provides services at their doorsteps and village, availability of basic banking service throughout the day, more convenient and lesser cost of transaction and most importantly due to advancement of modern technologies it is accessible for everyone.
Digital banking plays a crucial role to enhance a digital Nepal framework with more consumers connected with the bank and financial institutions could be more chances to promote the digital sector.
Mobile banking is popular as more transactions happen through a smartphone or other cellular device such as monitoring account balances, transferring funds between accounts, bill payment and locating an ATM.
With the more number of consumers are influencing towards the use of technology there could be more chances to accelerate growth for the digital Nepal concept.
Digital Nepal enhances the vision for contributing to the growth of the economy, alternative solutions for traditional methods and identifying an opportunity for Nepal to participate in the global economy.
Digital Nepal concepts focus on different sectors which help to boost economic growth and they are as follows digital foundation, agriculture, health, education, energy, tourism, finance and urban infrastructures.
Further development of a sound and smooth operation of financial operation is to encourage digital payments and to attract investments in financial technology by uplifting the growth of start-ups and telecom companies to offer services to drive financial inclusion.
With the rise of mobile phones or smartphones users, it is easier to access financial services and execute financial transactions so Nepal telecom one of the largest telecommunication services of the country has further plan to commence their subsidiary company which is mobile financial service.
Similarly, as per the monetary policies, there is a provision to manage the electronic payments through quick response or QR code which helps to encourage digital payments.
Digital payment provides easy acceptable services to the consumers in order to access financial services and transactions, different start-ups and other financial technologies entities are boosting the growth of electronic banking.
In Nepal, F1 soft private limited plays an imperative role in implementing the growth of digital banking as it is a leading financial technology company that provides transactional banking services to the bank and financial institutions in Nepal.
F1 soft private limited, a fintech company has introduced an innovative product which is mobile banking and mobile financial services in the country.
Khalti, also a leading online payment solution plays a crucial role to strengthen the digital sector in Nepal. As, an emerging online payment it provides services like basic utility payments, hotel bookings, movie and domestic flight tickets, events and so on to the customers.
In order to motivate the digital Nepal framework f1 soft also works with the government of Nepal and other different organizations to identify and develop digital financial services that benefit and improve the lives of the unbanked and under-banked across the country.
Mobile banking is popular as more transactions happen through a smartphone or other cellular device such as monitoring account balances, transferring funds between accounts, bill payment and locating an ATM.
Mobile banking allows to review transactions, transfer funds, pay bills and check account balance via mobile phones. Mobile banking also offers enhanced security with SMS transaction notifications and the ability to turn card accounts on or off.
Internet banking is another popular electronic transaction in order to conduct banking activity like transferring funds, paying bills, viewing checking and saving account balances, paying mortgages and purchasing financial instruments by using the internet.
The mobile banking and internet banking platforms were developed by F1 soft and these services are currently used by overall 90% of the banks in Nepal.
In Nepal, banks and financial institutions are categorized into four classes and they are commercial banks that fall in the A-class group, development banks that fall in the B-class group, finance companies that fall in the C-class group, and microfinance which falls in D class group.
As per the recent report of bank and financial institution commercial bank has more number of mobile banking and internet banking customers i.e. 89% and 97% respectively.
Both development banks and finance companies have low volume transactions of mobile banking and internet banking as compared to commercial banks which means that the A-class dominates in terms of digital payment over the other two classes.
Nepal Rastra Bank has encouraged to accelerate the payment system by establishing a national payment switch in order to prop up records of all electronic transactions conducted in Nepal.
For the promotion and encouragement of the payment system, Nepal Rastra Bank is committed to the safety and efficiency of Nepal’s national payments system which directly contributes to the country’s financial stability and economic growth.
With the direction of the central bank regarding quick response (QR) code payment, Nepal Bank Limited one of the commercial banks of Nepal has introduced a QR code-based payment system at different locations, business and service providers in Palpa where customers can now scan the QR code of the bank using their mobile banking service to pay for their purchases and service utilization.
Still, people of the country are not aware of technology mostly in the rural sector and some parts of the urban sector as well in which banks and financial institutions, and financial technology entities may face difficulties to focus on the digital sector.
Similarly, other banks and financial institution has also followed the same guidelines which are issued by the Nepal Rastra Bank in order to promote a safe and secure national payment system that directly benefits the growth of the economy.
Khalti, also a leading online payment solution plays a crucial role to strengthen the digital sector in Nepal. As, an emerging online payment it provides services like basic utility payments, hotel bookings, movie and domestic flight tickets, events and so on to the customers.
For the growth of the payment system, khalti has an agreement with different banks and financial institutions to access their financial services by the customers which directly contributes economic growth of the country.
Nepal Rastra Bank has encouraged different payment systems and settlements to improve digital financial services and products to different inaccessible regions.
In order to improve the digital payment system, the central bank of the country will initiate payment service providers and payment system operators to deliver multiple products to meet the financial needs of the customer.
Khalti, e-Sewa, and E-pay are some of the best examples of payment service providers and payment system operators that existed in Nepal.
As per the recent report of payment system development indicators, 43% of mobile banking customers has access to payment systems whereas more number of transactions of payment system is from digital wallet (25%) and followed by mobile banking (23%) which means the user of mobile banking is increasing.
With the advancement of technology, there would be a possible growth of the digital sector which directly boon the digital economy.
But, in a country like Nepal, there is still a problem for shifting towards digitalization due to the disruption of technology and also a lack of technical expertise which hinders the growth of the digital economy sector.
Still, people of the country are not aware of technology mostly in the rural sector and some parts of the urban sector as well in which banks and financial institutions, and financial technology entities may face difficulties to focus on the digital sector.
So, for the promotion and stabilizing of the digital payment system people of the country must be aware of the latest technology and also understand the benefits of it.
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