Nepal has seen a shift towards digital banking during the past few years. More and more people are accessing banking services using mobile phones. As per the latest statistics from Nepal Rastra Bank, more than 5 million people use mobile banking in Nepal. The reason: mobile banking apps have simplified the way we conduct banking transactions.
The shift to mobile banking has been driven by a number of factors and events. Accessing banking services through mobile apps is very simple and convenient. Likewise, banks have also started placing more effort on mobile banking by improving security and convenience of their apps and enhancing the user experience. Furthermore, broader access to digital devices, and improving network connectivity has helped in the rise of mobile banking in Nepal.
Mobile Banking in Nepal: Inception and the present status
In the case of Nepal, Laxmi Bank was the initiator of mobile banking. It started mobile (SMS) banking facility in 2004. Since then, there is a rise and rise of mobile banking in Nepal. More than 5 million people have already registered for mobile banking.
What can you do with mobile banking?
With mobile banking app installed on your phone, you can literally do your banking from anywhere. Some of the facilities provided by mobile banking apps are:
1. View your account balances
2. Instant updates about your banking transactions
3. Transfer funds to bank account of your friends and family
4. Pay utility bills
5. Load digital wallets like Khalti and make cashless payments on the go
Download trend of Nepali mobile banking apps
Digital banking penetration is relatively lower in Nepal compared to other Asian countries. But, it is growing exponentially. Majority of the banks in Nepal have been providing mobile banking facility to their users. Moreover, most of the commercial banks in Nepal (Class A banks) have their apps downloaded by over 100 thousand users. And this number is growing every other day.
Financial Inclusion through mobile banking?
The unbanked and underbanked population can be served easily through their mobile devices through mobile banking facility. But, in Nepal, we can’t see that happening yet. Majority of mobile banking users in Nepal are from urban areas. Digital literacy and financial literacy is required to increase access to mobile banking in rural parts of Nepal.
As per the WorldBank’s Global Findex Database 2017, only 45% of the adult population in Nepal has a bank account. For 20% of the unbanked population, the reason for not having an account is: financial institution being too far away. Mobile banking can be a tool to eliminate this barrier.
The graph below, prepared using statistics from Nepal Rastra Bank shows Nepal has recorded a steady growth rate of mobile banking users.
In a nutshell
Mobile banking in Nepal is growing at an accelerating pace. However, there is no recorded statistics about the volume of mobile banking transactions in Nepal. It is high time Nepal Rastra Bank start recording statistics the volume of mobile banking transactions on its monthly/quarterly/yearly reports on banking statistics.
The government has made already it possible it is possible to pay revenue and all forms of taxes from mobilephones. This shows mobile banking is the future of banking in Nepal.
More and more people are opting to mobile banking apps due to their accessibility and usefulness. Most importantly, from a bank’s economic point of view, servicing a client through mobile banking is highly cost-effective compared to servicing through branch banking.
Concerns over security issues and a lack of digital skills are the major barriers to the adoption of mobile banking in Nepal. If these issues are addressed, mobile banking in Nepal will surely get a huge boost.