Finances at a Click

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Finances at a Click

The inception of E-banking in Nepal began with the introduction of the ATM in 1995 and telebanking by the Himalayan Bank.

--BY RASHMI PANT

With the passage of time and globalisation, the internet has become an intrinsic part of modern day life. It has developed into an easy and reliable way of shopping, connecting with people, renting houses, searching for jobs, banking, and other daily activities. Narrowing down the internet to banking (Internet Banking), it has become a convenient and effective way for many customers to bank, due to the ease of access to accounts, online banking transfers, among other factors. These are some of the key reasons why BFIs are gradually shifting towards ‘click and brick’ (e-banking) models from brick and mortar (physical branches).

E-banking includes any electronic payment system that allows customers of a financial institution to conduct financial transactions using the e-banking website of the BFI. However, it is not limited to websites provided by the financial institutions as it also includes transactions performed through other delivery channels like mobile banking, electronic fund transfer (EFT), cards, telebanking and SMS banking. In other words, it is a shift towards using e-delivery channels such as internet, telephone, cards and mobile wallets. 

The inception of E-banking in Nepal began with the introduction of ATM in 1995 and telebanking by the Himalayan Bank. This was followed by the start of internet banking by Kumari Bank in 2002 (Mishra, 2008),almost 65-70 years after banking started in Nepal. At present, studies show that there are around 15.4 percent internet users (World Bank, 2015) in Nepal. Similarly, as per the Nepal Rastra Bank (NRB) data, among them, 50-60 percent users are from the Kathmandu Valley and about 90 percent of them are using internet banking services implying that e-banking users account for approximately 20 percent of the total population of the country. 

Despite the fact that the major cities like Kathmandu, Pokhara and Biratnagar have good internet penetration and a majority of the banks provide internet banking services, the data presented above indicates that internet banking has not advance to the desired level. This is due to the fact that even after fifteen years since the start of e-banking services in the country, a major chunk of customers are apparently hesitant to use the modern method and rely on the traditional ways of banking. 

Nevertheless, e-banking in the future will successfully make its way as the robust information flow from FIs and the wider access to internet services will make people turn to electronic banking. Additionally, Nepali banks have embraced innovative banking technologies and e-banking in recent years by investing in the expansion and improvement of their IT systems and the world wide web-based banking services. For instance, all 28 commercial banks operating in the country have declared e-business as one of their core strategies for future development.

To conclude, an e-banking service has its own pros and cons. Ease of use versus security, for instance, is one of the concerning factors regarding e-banking even though modern technologies are actively engaged in lessening the potential security threats. That is why customers should weigh the advantages and disadvantages of a resource or service carefully when their money is concerned.

The writer is Head Corporate Affairs, Business Planning Officer and Manager of Human Resource at Prabhu Bank Limited.

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