e-banking gaining momentum

With a rapid surge of mobile phone users in recent years in remote parts of the country and penetration of the internet in the urban areas, the banking industry is now shifting its focus from conventional services to modern internet based services.
Such tailored service of BFIs for the urban based clients and the rural areas, albeit slowly, is changing the banking culture of the country.

The technological advancement is proving a boon for banks, a convenience to clients and god-sent for the government toward increasing financial inclusion.

The rural folks are happy with banking services, which is otherwise a distant dream for them. These services are now available in their mobile handsets. The urban clients no more need to visit the banks and financial institutions for most of general banking services like balance inquiry, balance statement, check book request, the information which is a now click away in their computer or smartphone. Mobile banking in rural areas has also helped government meet its far-fetched goal of ensuring financial inclusion of all people.

Also, there is an immense business for the banking industry in rural areas. The BFIs have failed to tap this vast opportunities due to the high cost of setting up their branches and other structures. The lack of presence of the BFIs has either compelled the people in rural areas to depend on informal practices or made them prone to exploitation by illegal financial channels.
“There is a huge amount of money in the pockets of people in rural areas. It’s not only difficult for banks to set up their branches there, but in many places it’s impossible due to scattered settlement and adverse terrain,” opines Nikesh Ghimire, head of marketing and communication department at Laxmi Bank.

Branchless banking offers general banking services like deposits and withdrawals, utility and general payments to persons and merchants and top-ups, among others.

“The branchless banking or mobile banking is becoming a good alternative for banks and to rural people to meet banking needs,” adds banker Ghimire, who has traveled extensively across Nepal promoting branchless banking.

Laxmi Bank and Kumari Bank are considered pioneer banks to introduce mobile and internet banking in the country in 2001. Almost all the banks ranging from multinational venture Standard Chartered Bank (SCBNL) Nepal to fully-owned government bank Rastriya Banijya Bank Ltd are now rushing to incorporate online features in their operations as well as their conventional banking products.

While the mobile banking or branchless banking is meeting the need of banking services for rural people in absence of bank branches, the online or internet banking has become a matter of convenience when it comes to urban clients.

The online banking service has enabled clients to carry out banking activities more quickly as well as increased their comfort, while it also saves times as they are entitled to 24-hour services without any physical interaction with the bank.
Diwakar Poudel, Head of Brand and Marketing and Corporate Affairs at SCBNL, says that the bank has been delivering faster and superior services through online electronic channels, in line with the bank’s focus on digitization and becoming the main digital bank for its customers. “We are at the forefront in award-winning Internet Banking technology with an array of services that is helping customers transact at their convenience,” adds Poudel.

Despite convenience, many clients are still not used to online banking services. Also, many clients rue that the internet banking services were not client-friendly, or that the websites of the banks are not trustworthy and user-friendly.
Badri Prasad Nepal, a civil engineer working with Department of Road, shares how he reverted to physical banking service after experiencing snags in online banking service.

“If I look at the website of the bank where I am an account holder, it is complex. I used it once or twice, but soon tired of it as I was experiencing problems in completing transactions. It was so frustrating. Now, I find visiting branch banks trustworthy,” shares Nepal.

Similarly, there is also a segment of clients who believe BFIs have failed to catch up with the pace of development and advance of internet and modern banking services in terms of introducing innovative internet banking products. Most banks provide balance inquiry, check book request, status of inward remittance, request for account statement, funds transfer from within same bank accounts, account information, utility bill payments, , personal updates of account and credit card transaction review, among other online banking services.

According to banker Ghimire, it’s a matter of confidence for customers. “A client will opt to queue in the branch of the bank for half hour, instead of withdrawing money from ATM which is right outside his office,” says Ghimire. “Customers should be habituated with the new system. It can be learned either from pressure or out of need. This is slow process which will take time,” adds Ghimire.

Even for banks, online banking operation is a cost-effective way to do business. According to an estimate, bank expense is around Rs 150 and Rs 200 per transaction at its branches based in urban and rural areas respectively, while it can be done for just Rs 20 from online and mobile channels.

However, 14 years after of the start of internet banking, it is yet to mature. The banks services are mostly related to informational services for clients, rather than to offering services related to transactions. The inter-bank transaction service as part of online banking is still a far cry.

Most bankers agree that mobile and internet banking is yet to become mainstream, yet is being developed as an integral part of overall financial sector.

Nepal Rastra Bank (NRB) -- the central bank -- has also been giving high priority to internet and mobile banking, realizing that such practice could help it meet its objective of greater financial inclusion. NRB is also encouraging BFIs to enhance their outreach through policy interventions like creating rural focus branch licensing policy, introducing electronic banking guidelines and supporting alternate deliver models like agent banking.

According to spokesperson of NRB Manmohan Shrestha, BFIs should tap the opportunity of high penetration of mobile phones across the country by providing banking services to the unbanked.

“Mobile banking is an important way to inculcate banking habit among the people. Digitization of banking service is important for us as it helps take banking to peoples’ doorsteps,” says Shrestha, adding, “There is also a need to set up infrastructures which allow basic technology and mobile network connection and distribution network.”

Source: Republica