'Nepal has taken big strides. The question now is how fast it can scale.'

Deepak Sharma, a veteran of South Asia’s digital banking scene, has worked on major initiatives from Kotak 811 to embedded finance and India Stack. He now advises enterprises and mentors tech ventures across SaaS, AI, DeepTech, and fintech. On a recent trip to Kathmandu, he told New Business Age that Nepal has made strong gains in digital payments and financial services, but future progress will hinge on faster development of digital ID, modern banking architecture, and
stronger talent and regulation. Excerpts:

Q: How would you describe Nepal’s current stage of digital transformation—particularly its digital public infrastructure? What foundational elements are required to accelerate progress?

A: I have visited Nepal several times and have a clear sense of where the country stands in terms of regulation, digital public infrastructure, and how banks are approaching transformation. What I have observed is that Nepali banks are at different stages of this journey. As in any country, some institutions are ahead of others. But overall, what can truly accelerate sector-wide transformation is stronger digital public infrastructure.

Nepal already has a real-time payment system, which is why platforms such as eSewa and Fonepay QR took off so quickly. Customers are clearly ready for digital services. What is needed now is a robust digital ID system, stronger credit bureaus, and the ability to open accounts end-to-end through digital channels. People  should be able to use a verified digital identity linked to their mobile number. Once the foundational layers—identity, connectivity, and credit information—are in place, banks will be able to accelerate transformation much more rapidly. The second requirement for scale is rethinking IT investments and technology architecture. Banks need a longer-term view. They must return to the drawing board and map out a three- to five-year strategy and vision. Transformation is a long-term undertaking; it cannot be approached with a year-to-year
mindset.

Nepal’s banking sector has seen a wave of mergers, and many banks have grown rapidly. That raises important questions: How should  they think about technology? About credit and risk? About NPA management? These are common challenges that banks across  Nepal need to address. Similarly, banks must focus on APIs and data strategies, employee skilling and training, the right business models, building digital platforms, CRM, and fraud management.

Q: Having interacted with Nepali bankers and bank promoters, do you sense a readiness for digital transformation?

A: Some are definitely ready, and many others will likely go back and rethink their approach. There is a clear understanding that transformation creates value and that change is necessary. But banks also need a lot of support. It is not about the lack of intent—many simply do not know where to begin: how to find the right talent, how to choose and integrate the right technologies, where to invest, and how to sequence the journey. Bank boards, too, need a deeper understanding of digital technologies, transformation processes, and emerging risks. When boards are more aware and informed, it empowers executive management and helps accelerate change.

Q: Much of the innovation in South Asia’s digital payments ecosystem has come from outside traditional banking—eSewa in Nepal being a prime example. How do you see the role of such innovators?

A: Innovation is always a product of the wider ecosystem. There are things the government can enable, and there are things regulators can design to accelerate innovation. But much depends on the strength of the startup and fintech ecosystem. Are banks working closely with startups—either co-developing solutions or purchasing products from them? Are regulators ensuring clarity on data governance, risk, cybersecurity, identity and fraud management, and credit-bureau frameworks? Regulators have a critical role, and banks also need  to do much more. This includes investing in people, training, and talent development. Right now, data-science talent is scarce—even as everyone is talking about AI. The first step is getting your data in order and building the right data science teams. Then comes deciding your cloud versus data-center strategy. These are basic foundational pieces that must be in place. And building a healthy digital ecosystem is everyone’s responsibility—including the media.

Q: Several initiatives—tokenization, Passkey, Click to Pay, and AI-enabled solutions—are emerging across South Asia. Which technologies will have the biggest impact in Nepal in the next few years?

A: If you look at India, and more broadly at South Asia as a region of emerging markets, the one powerful device everyone has is the smartphone. Your phone can do almost everything—banking, payments, transactions—and this shift is happening rapidly in Nepal too. I have been visiting Nepal for the past two years, and I have used UPI to pay across all Fonepay QR touchpoints. Nepal’s payment landscape will continue to be driven by a QR-led revolution, just as it happened in India and other markets. It is simple, low-cost, and easy to onboard merchants. Whether it is taxis or small vendors, most now accept digital payments. They could never have afforded POS terminals, and issuing and distributing credit cards is still expensive. Over time, credit—either through cards or embedded credit within payment systems—will be the next big wave. In India, we now have credit on UPI. Similarly, enabling consumers in Nepal to use Fonepay QR to pay through their credit instruments should become the next major development. In payments, Nepal has truly accelerated innovation over the last three to four years.

Q: Wallet companies argue their growth is limited because banks are offering mobile and internet banking. Do you agree?

A: I do. A bank account is essentially the biggest wallet. I often say you do not need an additional wallet if your bank account already holds your money. If your funds are sitting in your bank account, why move them to a separate wallet just to make a transaction? The key is ensuring that bank accounts are secure and that your money remains  safe when using digital channels. As long as strong security is in place and the payment ecosystem offers convenience, there are fewer  reasons to rely on standalone wallets.

Q: What business models will allow wallet providers like eSewa  and Khalti to remain competitive and grow?

A: Wallet companies in Nepal are doing a solid job on the merchant and acquiring sides. There is real value in merchant acquiring. They have built strong payment technology, and as long as it remains integrated across payment systems—similar to how UPI evolved in India—they can continue to play a central role. They can become the default rails for everyday payments: utility bills, incoming remittances, even QR-based payments abroad when people travel. Interoperability across markets should be possible, and I believe they are already thinking in that direction. Developing these kinds of payment products is where the real opportunity lies for them.

Q: Agentic AI has become a buzzword in financial services. How is it being adopted to enhance digital payment operations?

A: Agentic AI is a very real opportunity. Think of it this way: in a bank, you might have five people doing five different tasks—reconciliation, reviewing settlement files, handling customer service, and so on. Agentic AI acts as a digital counterpart to these human roles. Instead of separate individuals handling each function, an AI agent can execute them. In payments and banking where massive volumes of data are processed and speed is critical—a multi-agent framework can deliver faster processing, greater accuracy, and reduced resource use. And with margins in payments shrinking, you need technology that can handle scale, volume, cost, and security efficiently. Multi agent AI offers precisely that potential—not just for payments, but across the entire banking and financial services sector.

Q: How can digital payment solutions be made more inclusive— especially for rural users in Nepal and across South Asia?

A: Inclusion ultimately depends on creating the right incentives for those driving payment adoption. Onboard merchants require  real work: educating them, giving them QR codes, training them on how to accept payments, and linking those payments to their bank accounts. There are costs to raising awareness, especially on the consumer side. But once people are trained, adoption is not a problem. Users pick up digital habits quickly, and once they do, they tend to stick with them. So the real question for regulators and market makers is: how do you design the right incentive structure to drive adoption, and how do you encourage innovation across the payment ecosystem? That is critical. Look at India’s experience. Once  QR adoption scaled, the next wave of innovation was Autopay—using the same rails to buy stocks, transfer funds, or pay for groceries, electricity, and other utilities.

Q: What will it take for Nepal to scale digital payments— particularly in the areas of security, universal acceptance, and regulation—and what lessons can be drawn from markets like India?

A: For digital payments to scale, security is the most important factor. You need strong data encryption, robust security standards, and protection against phishing calls, SIM-binding fraud, and
mobile-device vulnerabilities. Nepal has done well in the first phase  of digital payments, but the next challenge is making the system universal—usable across every type of transaction: online, offline, restaurants, transit, everything. When you can pay everywhere with a single payment instrument, the possibilities become enormous. Nepal has made significant progress over the past four years. The question now is: how do you scale from here? That is why a system like UPI in India has gone global.

(This opinion article was originally published in December 2025 issue of New Business Age magazine.)