There is probably no disagreement today that digitization of business with applications of emerging digital technologies is lifeblood of banking and financial service industry and is bound to grow in prominence in future. Banking and financial service institutions have acknowledged that digitization of processes, digitalization of businesses and digital transformation of the organization, are survival strategies to staying relevant amidst changing market conditions. Banking industry realizes the limitations of legacy IT systems and has started incorporating digital technologies like AI, Machine Learning, Cloud Computing, Big Data, Block Chain etc., into the ‘digital’ business strategy. In the global context of banking industry undergoing digital transformation, Nepali Banking and Financial Service Industry too has geared up serious discussions and deliberations for digital transformation.
From my professional experience of over three decades in Nepali banking industry, banking institutions have been pro-actively adopting digital technologies into banking business. From an era of complete physical banking in the 1980s and early 1990s, banking in Nepal has invested significant resources in digital and alternate channel services and digitization of processes. But the industry was unable to keep up with the rapid and astounding pace of development in the field of digital technologies in the past decade or so. The changing competitive landscape and growing aspirations of stakeholders has once again forced the banking industry to revisit their digital strategy.
Although globalization has enabled Nepali Banking and Financial Sector to get easy and instant access to relevant, state-of-art and tested digital technologies and services, the industry is slower in embracing digital transformation. The industry faces several challenges, some internal to organizations, and some at the industry and ecosystem level. In my experience, major challenges at the ecosystem level are perceived risks of implementing digital technologies compounded by inadequate infrastructure. As I see it, it is largely a function of knowledge and expertise available in the industry for strategic management, and leveraging emerging digital technologies for sustainable business growth and managing eminent and perceived risks. Now, it’s up to the institutions and industry as a whole to build knowledge and expertise for planning and implementing digital transformation strategies.
It’s a matter of pride for major banks like Nabil Bank who have since long pioneered financial service innovations and offered stewardship to Nepali Banking and Financial Service Industry, have once again assumed the role of leading the industry towards digital transformation. For instance, Nabil Bank leveraged rich domain knowledge and expertise of one of the globally renowned management consultants, evaluated its business goals and strategies, formulated transformation strategies and programs and has now, set out to the transformation journey. In the process of setting out to this journey, the Bank has been able to offer stewardship to the industry in the form of motivation to transform, knowledge sharing and living the transformation by example.
Banks acknowledge that transformation may be a difficult journey but the destination is bright for banks individually, as an industry and as a nation. As the digital aspirations and strategy of the government and the regulator are aligned with that of the banking institutions, the industry is bound to overcome the challenges and come out successfully at the other end of the journey.
Nepal has historically and to this day largely relied on digital technology based services developed by international vendors. As the banking industry is gearing for digital transformation, there is a promising opportunity for those with domain knowledge and expertise to invest in Nepali financial service industry for technology products and services, technology infrastructure and consulting services, to mention a few. Banks are in need of partners who bring to the table rich domain knowledge and expertise, partners that offer consultative approach, guidance and services during technology implementations, and value long term business relationships rather than transactional relationships.
