IMPACT OF DIGITAL TRANSFORMATION ON THE NEPALESE

BANKING SECTOR

(With reference to “NIC ASIA BANK LIMITED”)

BY

Bikash Thapa (30540/21)

Asmita Shrestha (30539/21)

Soweta Rayamajhi (30561/21)

Nirjala Subedi (30548/21)

Manjika Shrees Thapa (30546/21)

A Project Report Submitted to

Faculty of Management, Tribhuvan University

in partial fulfillment of the requirements for the degree of

Bachelor of Business Administration

at the

Dhawalagiri Multiple Campus

Tribhuvan University

Baglung

Dec 2024
 DECLARATION

I hereby declare that report entitled IMPACT OF DIGITAL TRANSFORMATION ON THE

NEPALESE BANKING SECTOR submitted to the BBA program, Dhawalagiri Multiple
Campus, Baglung is an original place of work under the supervision of Mr. Subash Kc, faculty
member, Dhawalagiri Multiple Campus, Baglung and is submitted in partial fulfilment of the
requirement for degree of BBA Fifth Semester. This report has not been submitted to any other
college for the award of any degree.

....................... .......................

Signature Signature

Bikash Thapa Asmita Shrestha

Dec, 2024 Dec, 2024

....................... .......................

Signature Signature

Soweta Rayamajhi Nirjala Subedi

Dec, 2024 Dec, 2024

.......................

Signature

Manjika Shrees Thapa

Dec, 2024

ii
 ACKNOWLEDGEMENT
The study entitled IMPACT OF DIGITAL TRANSFORMATION ON THE NEPALESE
BANKING SECTOR has been prepared in partial fulfillment of the requirements for the
degree of Bachelor of Business Administration in the faculty of Management, Tribhuvan
University. We would like to express our deepest gratitude to everyone who made it possible
for us to complete this research work. It would not have been possible to write this research
report without the assistance and support of many generous people, only some of whom it is
possible to give a particular mention here.

Foremost, we would like to express our sincere gratitude to our supervisor Mr. Subash Kc sir
for his support of our studies and research and for their patience and immense knowledge.
Their advice was invaluable during the research and writing of the report.

We would like to acknowledge with much appreciation the crucial role of the staffs and
manager of; “NIC ASIA Bank Limited”, who helped us by providing information regarding
organization changes and its development. It is our great pleasure to submit this report as the
partial fulfilment of the course materials for the curriculum.

Thanks to the internet, we were able to read a variety of reference articles, journals, study
materials, and websites before writing the paper.

Finally, we must express our profound gratitude to the faculty of Management, Tribhuvan
University and all the faculty members for direct and indirect moral support.

Bikash Thapa
Asmita Shrestha
Soweta Rayamajhi
Nirjala Subedi
Manjika Shrees Thapa
Dec, 2024

iii
 Table of Contents
TITLE…………………………………………………..……………………………..……….i
DECLARATION....................................................................................................................... ii
ACKNOWLEDGEMENT ....................................................................................................... iii
ABSTRACT ............................................................................................................................. vi
CHAPTER I .............................................................................................................................. 1
INTRODUCTION .................................................................................................................... 1
1.1 Introduction to the Project Work ..................................................................................... 1
1.2 Objectives of Project Work ............................................................................................. 1
1.3 Background of the Study ................................................................................................. 2
1.4 Objective of the Study ..................................................................................................... 3
1.5 Significance of the Study ................................................................................................ 3
1.6 Limitation of the Study ................................................................................................... 3
1.7 Methodology of the study ............................................................................................... 3
CHAPTER II............................................................................................................................. 5
LITRETURE REVIEW ............................................................................................................ 5
2.1 Operational Efficiency .................................................................................................... 5
2.2 Customer Behavior .......................................................................................................... 5
2.3 Customer Relationship Management .............................................................................. 6
2.4 Regulatory and Cybersecurity Challenges ...................................................................... 6
2.5 Economic Implications .................................................................................................... 6
CHAPTER III ........................................................................................................................... 8
DATA PRESENTATION AND ANALYSIS ............................................................................. 8
3.1. Digital Transformation in the Banking Sector ............................................................... 8
3.2. Digital Transformation in the Nepalese Banking Sector ................................................ 8
3.2.1 Evolution and Current State ..................................................................................... 8
3.2.2 Key Technologies Adopted ....................................................................................... 9
3.3. Impact on Operational Efficiency ................................................................................ 10
3.3.1 Improved Service Delivery..................................................................................... 10
3.3.2 Cost Efficiency ....................................................................................................... 10
3.3.3 Enhanced Data Management .................................................................................. 10
3.4. Impact on Customer Behavior ..................................................................................... 10

iv
 3.4.1 Increased Adoption of Digital Banking .................................................................. 10
3.4.2 Customer Expectations ............................................................................................11
3.5. Regulatory and Cybersecurity Challenges ....................................................................11
3.5.1 Regulatory Compliance ...........................................................................................11
3.5.2 Cybersecurity Threats ............................................................................................. 12
3.5.3 Data Privacy Issues ................................................................................................. 12
3.6. Case Studies ................................................................................................................. 12
3.6.1 NIC ASIA BANK LIMITED .................................................................................. 12
CHAPTER IV ......................................................................................................................... 20
CONCLUSION AND ACTION IMPLICATIONS ................................................................. 20
4.1 Conclusion..................................................................................................................... 20
4.2 Action Implications ....................................................................................................... 21
REFERENCES ....................................................................................................................... 23

TABLE OF FIGURE
FIGURE 1: IS USED IN NIC ASIA BANK ........................................................................... 13
FIGURE 2: IT FACILITIES USED IN NIC ASIA BANK .................................................... 15
FIGURE 3: ORGANIZATION STRUCTURE OF NIC ASIA BANK .................................. 18

v
 ABSTRACT
The Nepalese banking sector has undergone a significant transformation in recent years, driven
primarily by technological advancements. This shift has had a profound impact on various
aspects of banking operations, including customer experience, operational efficiency, and
regulatory compliance.

Digital technologies have empowered banks to offer a wider range of products and services,
reaching a larger customer base, especially in rural areas. Online banking, mobile banking, and
digital payments have become increasingly popular, leading to greater financial inclusion and
convenience for consumers. Moreover, these advancements have streamlined banking
processes, reducing operational costs and improving efficiency.

However, the adoption of digital technologies has also brought new challenges, such as
cybersecurity risks and regulatory compliance issues. Protecting sensitive customer data and
ensuring adherence to evolving regulations are critical concerns for banks. To navigate these
challenges, banks must invest in robust security measures and stay updated on regulatory
developments.

Overall, digital transformation has been a positive force in the Nepalese banking sector. It has
enhanced customer experience, improved operational efficiency, and contributed to economic
growth. As the country continues to embrace digital technologies, it is essential to address the
associated challenges to ensure sustainable and inclusive banking services.

vi
 CHAPTER I
INTRODUCTION

1.1 Introduction to the Project Work

Report writing has its own theoretical and practical importance in developing the skills of
students. It also concentrates on developing oral skills of students and the capacity to gain
and research information on a particular field. While writing a report, students also
experience and develop a skill of summarizing the information collected by them. This
report sincerely prepared for the partial fulfillment of the requirements for the degree of
Bachelor of Business Administration (BBA) third semester. The report works as a basis for
internal evaluation and viva examination as demands of our course.
This project report provides information obtained through field visit and website analysis
about the features and services offered by the bank. The report gives attention to various
services provided, performance, security and reliability, use of information system and
collaboration tools, and their business benefits and major ethical issues caused by ISs in
banking sector. It discusses about the major ISs, collaboration tools, marketing tools and
other technologies used in the organization for managerial, operational and strategic
functions. The project report also focuses on the Enterprise Resource planning System
(ERP) which has recently been installed in the firm and also about the upcoming and
ongoing technologies (Auto life). The project report also discusses about the major
business processes in the organization.

1.2 Objectives of Project Work

The objectives of the study and this project work are:

• To know the major ISs used in the managerial level and its business benefits.
• To know information about bank products/services and organizational chart.
• To know about the formal and informal collaboration tools used by banking
sector.
• To determine the ethical issues arises due to the use of IT.
• To understand about the system development in bank.
 2

1.3 Background of the Study

The global banking industry is experiencing significant transformation, largely driven by

rapid technological advancements and evolving consumer expectations. This shift is
reshaping the way financial institutions operate, particularly in developing countries like
Nepal, where digital transformation has emerged as a crucial strategy for enhancing service
delivery, operational efficiency, and financial inclusion.

In Nepal, the adoption of digital technologies by banks has been instrumental in improving
service delivery. Banks are increasingly leveraging online platforms, mobile banking apps,
and digital wallets to offer customers convenient and accessible banking services
(Shrestha, 2022). These digital channels allow customers to perform transactions, access
account information, and utilize various banking services from anywhere, at any time,
thereby reducing the need for physical branch visits. This shift not only enhances customer
satisfaction but also aligns with the growing consumer demand for faster, more efficient
banking experiences.

Operational efficiency in Nepalese banks has also been significantly impacted by digital
transformation. The integration of advanced technologies such as core banking systems
(CBS) and automated processing tools has streamlined banking operations, reducing
manual errors and speeding up transaction processing (Nepal Rastra Bank, 2023). These
improvements have led to cost reductions and increased productivity, enabling banks to
allocate resources more effectively and focus on value-added services. As a result, banks
are better positioned to compete in an increasingly digital economy.

Furthermore, digital transformation is playing a pivotal role in promoting financial

inclusion in Nepal. By extending banking services to remote and underserved areas through
digital platforms, banks are helping to bring more individuals into the formal financial
system (Bhattarai, 2020). This expansion of financial access is particularly important in a
country where a significant portion of the population has traditionally been excluded from
formal banking services. Digital banking thus contributes to economic empowerment by
providing individuals and businesses with the tools they need to manage their finances,
save, and invest.
 3

In conclusion, digital transformation is driving substantial changes in the Nepalese banking

sector, enhancing service delivery, operational efficiency, and financial inclusion. As banks
continue to innovate and adopt new technologies, these trends are likely to further reshape
the financial landscape in Nepal.

1.4 Objective of the Study

• To analyze the impact of digital transformation on the operational efficiency of banks

in Nepal
• To assess relationship and changes in customer behavior
• To evaluate regulatory and cybersecurity challenges
• To understand the broader economic implications for the banking industry.
• To study existing of information technology used in NIC.

1.5 Significance of the Study

This study investigates the digital transformation of commercial banks in Nepal, adopting
rapid digital change in field of banking. Nepalese banks embraced various digital
technologies, such as mobile banking, online platforms, and automated systems, leading to
significant improvements in operational efficiency and customer service. The accelerated
adoption of these technologies has played a crucial role in expanding financial inclusion
and meeting the evolving demands of consumers in the digital age.

1.6 Limitation of the Study

The study’s limitations often serve as an obstacle to an in-depth review of the subject
matter
concerned. Major limitations of the study are listed below:
• The study will be based on secondary data and more educated people’s opinions,
views, responses in this study. Opinions of the respondents have been taken as being
true, which may not be correct due to changing atmosphere of technology.

1.7 Methodology of the study

For conducting the study, I have used both primary data and secondary. The sources
are given below:
Primary data sources:
 4

Primary data have been collected through observation and interview.

Secondary data sources:
As we can get information and data from various sources, websites, articles. We can easily
access the related and required data because of advancement of technology. The main
source of secondary data comprises related journals, newspaper, internet, official
publication, related studies and thesis etc.
 5

CHAPTER II
LITRETURE REVIEW
Digital transformation has emerged as a pivotal force reshaping industry across the globe,
with the banking sector being no exception. In Nepal, this transformation has been
particularly pronounced, as banks increasingly integrate digital technologies into their
operations to meet the evolving demands of customers and enhance overall efficiency. This
paper delves into the impact of digital transformation on the operational efficiency of
Nepalese banks, shifts in customer behavior, regulatory and cybersecurity challenges, and
the broader economic implications for the banking industry.

2.1 Operational Efficiency

The integration of digital technologies in Nepalese banks has significantly enhanced
operational efficiency. Automation of key banking processes, such as loan approvals,
account management, and customer onboarding, has reduced the turnaround time for
these services, allowing banks to serve customers more swiftly and accurately
(Sharma & Thapa, 2021). This automation minimizes the likelihood of human error,
leading to improved service quality. Additionally, digital platforms reduce the
dependency on physical branches, which not only cuts operational costs but also
extends the reach of banking services to remote areas (Acharya & Shrestha, 2020).
These advancements contribute to a leaner, more cost-effective banking model that
can quickly adapt to changing market conditions.

2.2 Customer Behavior

The advent of digital banking has led to a significant shift in customer behaviour in
Nepal. There is a growing preference for online and mobile banking services, driven
by the convenience of accessing financial services anytime and anywhere (Khanal &
Pradhan, 2019). Customers now expect round-the-clock access to their accounts,
seamless digital transactions, and personalized banking experiences. These changes
have compelled banks to adopt a more customer-centric approach, offering tailored
services and products that meet the specific needs of different customer segments
(Shrestha & Joshi, 2018). Banks that fail to adapt to these evolving expectations risk
losing customers to more agile, digitally-savvy competitors.
 6

2.3 Customer Relationship Management

Customer relationship management (CRM) plays a crucial role in shaping customer
behavior and satisfaction in Nepali banks. Research indicates that CRM positively
influences customer behavior, with social media directly impacting customer
interactions (Baral & Shrestha, 2019). CRM implementation in banks is essential for
meeting customer needs and creating lasting relationships (Baser & Thakar, 2015).
In Nepal, factors such as reliability, responsiveness, assurance, and tangibles
significantly affect customer satisfaction in retail banking services (Subedi, 2019).
Additionally, corporate social responsibility (CSR) has been identified as an
important aspect of bank performance and reputation in Nepal, with investments in
CSR improving public perception and ownership of banks (Koirala & Thapa, 2023).
These studies collectively emphasize the importance of CRM, service quality, and
CSR in enhancing customer satisfaction and overall bank performance in the Nepali
banking sector.

2.4 Regulatory and Cybersecurity Challenges

The rapid pace of digital transformation has introduced new challenges, particularly
in the areas of regulation and cybersecurity. The Nepal Rastra Bank (NRB), the central
bank of Nepal, has implemented a series of regulations aimed at ensuring the security
and integrity of digital banking systems (Nepal Rastra Bank, 2022). However, as
digital banking platforms become more sophisticated, so too do the cyber threats they
face. Cybersecurity risks, including data breaches, phishing attacks, and financial
fraud, pose significant challenges to the stability and security of the banking sector
(Shrestha & Thapa, 2020). Banks must continuously invest in advanced cybersecurity
measures and ensure compliance with regulatory requirements to protect customer
data and maintain trust.

2.5 Economic Implications

Digital transformation has the potential to drive significant economic growth in Nepal
by enhancing financial inclusion and supporting the development of small and
medium-sized enterprises (SMEs). By extending banking services to underserved
populations, digital banking can help reduce poverty and economic inequality
(Bhandari & Shrestha, 2018). Additionally, digital platforms provide SMEs with
 7

greater access to credit and financial services, enabling them to grow and contribute
to the economy (Acharya & Shrestha, 2020). This increased access to financial
resources is crucial for fostering entrepreneurship and innovation, which are key
drivers of economic development.

Digital transformation is undeniably reshaping the landscape of the Nepalese banking

sector. While it offers substantial benefits, including improved operational efficiency,
customer satisfaction, and economic growth, it also presents challenges related to
regulation and cybersecurity. To fully harness the potential of digital transformation,
Nepalese banks must continue to invest in technology, develop a skilled workforce,
and adopt a customer-centric approach that aligns with the evolving needs of their
customers. By doing so, they can ensure sustainable growth and contribute to the
broader economic development of Nepal.
 8

CHAPTER III
DATA PRESENTATION AND ANALYSIS

3.1. Digital Transformation in the Banking Sector

Digital transformation in banking refers to the integration of digital technologies into all
areas of banking operations, fundamentally changing how banks operate and deliver value
to customers. Key elements include:

• Online Banking: Banking services accessible via the internet.

• Mobile Banking: Banking through mobile apps.
• Payment Systems: Digital payment solutions like e-wallets and QR payments.
• Automation: Use of AI and machine learning for customer service, fraud detection,
etc.

Globally, digital transformation in banking has led to the emergence of FinTech, blockchain
technology, and AI-driven banking solutions, which have redefined customer experiences
and operational frameworks.

3.2. Digital Transformation in the Nepalese Banking Sector

3.2.1 Evolution and Current State

Nepal's banking sector initiated its journey towards digital transformation in the early
2010s, marked by the introduction of mobile and online banking services, as well as the
development of digital payment platforms. These early initiatives were driven by the need
to improve service delivery, enhance operational efficiency, and cater to the evolving
demands of a tech-savvy customer base (Sharma & Thapa, 2021). Over the past decade,
these efforts have intensified, with banks increasingly investing in digital infrastructure
and adopting innovative technologies to streamline their operations and offer seamless,
customer-centric services.

By 2024, nearly all major commercial banks in Nepal have embraced comprehensive
digital strategies, integrating advanced technologies like artificial intelligence (AI),
blockchain, and big data analytics to enhance their service offerings and optimize their
internal processes (Acharya & Shrestha, 2020). These digital strategies have not only
 9

improved the efficiency and reliability of banking services but have also expanded
financial inclusion by making banking accessible to a broader population, particularly in
remote and underserved areas (Nepal Rastra Bank, 2022). The widespread adoption of
digital banking has thus transformed the Nepalese banking landscape, positioning it for
continued growth and innovation in the years to come.

3.2.2 Key Technologies Adopted

Nepal's banking sector has seen significant advancements in digital technologies, with
mobile banking apps, digital wallets, upgraded Core Banking Systems (CBS), and
advanced Automated Teller Machines (ATMs) playing pivotal roles in this transformation.

Mobile banking apps have become a standard offering among most banks in Nepal,
providing customers with features such as fund transfers, bill payments, and
comprehensive account management. These apps offer a convenient, 24/7 banking
experience, catering to the increasing demand for digital services (Shrestha & Joshi,
2018).

Digital wallets like eSewa and Khalti have gained widespread popularity, offering a quick
and secure method for transactions, including mobile recharges, utility bill payments, and
online shopping. These platforms have been instrumental in driving financial inclusion by
providing easy access to financial services, particularly for those in remote areas
(Bhandari & Shrestha, 2018).

Core Banking Systems (CBS) have also undergone significant upgrades, enabling better
data management, enhanced service delivery, and improved operational efficiency. These
systems are critical in supporting the back-end operations of banks, ensuring that digital
services are seamless and reliable (Nepal Rastra Bank, 2022).

Additionally, ATMs in Nepal have been enhanced with new features such as cardless
withdrawals and QR code payments, further improving customer convenience and
reducing reliance on physical cards (Acharya & Shrestha, 2020).
 10

3.3. Impact on Operational Efficiency

3.3.1 Improved Service Delivery

Digital transformation in Nepalese banking has dramatically enhanced customer service

by enabling 24/7 access to banking services through online and mobile platforms. This
shift has reduced the need for physical visits to branches, allowing customers to perform
various transactions, such as fund transfers, bill payments, and account inquiries, at their
convenience (Sharma & Thapa, 2021). The ability to access banking services anytime has
led to a significant reduction in transaction times, as customers no longer have to wait in
line or adhere to branch operating hours.

3.3.2 Cost Efficiency

Automation and the adoption of digital channels have significantly reduced operational
costs for banks in Nepal, particularly in areas such as customer service, transaction
processing, and cash handling. By automating routine tasks like customer inquiries,
account management, and transaction processing, banks have minimized the need for
extensive manpower and physical infrastructure, leading to substantial cost savings
(Sharma & Thapa, 2021).

3.3.3 Enhanced Data Management

The integration of digital tools in Nepalese banks has significantly enhanced their ability
to manage and analyze vast amounts of customer data, leading to improved decision-
making and the provision of personalized services. Advanced data analytics enables banks
to gain deeper insights into customer behaviors, preferences, and needs, allowing them to
tailor products and services more effectively (Acharya & Shrestha, 2020). For instance,
banks can identify patterns in spending, saving, and borrowing, which helps them offer
personalized financial products and targeted marketing campaigns.

3.4. Impact on Customer Behavior

3.4.1 Increased Adoption of Digital Banking

The adoption of digital banking services in Nepal has surged dramatically in recent years,
as more customers increasingly favor online and mobile banking over traditional methods.
This shift is driven by the convenience, accessibility, and efficiency offered by digital
 11

platforms, which allow customers to conduct transactions, manage accounts, and access
financial services from anywhere, at any time (Khanal & Pradhan, 2019). The widespread
use of smartphones and improved internet connectivity have further facilitated this
transition, enabling more people to engage with digital banking services.

3.4.2 Customer Expectations

As digital banking has become more prevalent, customer expectations have shifted towards
demanding faster, more convenient services with personalized experiences. Customers
now seek immediate access to their financial information, seamless transaction processes,
and tailored banking solutions that cater to their individual needs (Shrestha & Joshi, 2018).
This shift in expectations has driven banks to continuously innovate and enhance their
digital offerings.

To meet these demands, banks are investing in advanced technologies such as artificial
intelligence (AI), big data analytics, and machine learning to provide personalized services,
anticipate customer needs, and streamline operations (Acharya & Shrestha, 2020). For
example, AI-driven chatbots and personalized financial advice are becoming standard
features in digital banking platforms, aimed at delivering a more engaging and customized
banking experience (Sharma & Thapa, 2021). This ongoing innovation is crucial for banks
to stay competitive and retain customer loyalty in an increasingly digital landscape.

3.5. Regulatory and Cybersecurity Challenges

3.5.1 Regulatory Compliance

The rapid adoption of digital technologies in Nepal's banking sector has necessitated
updates to regulatory frameworks to ensure the security and reliability of digital banking
services. In response, the Nepal Rastra Bank (NRB) has introduced comprehensive
guidelines aimed at safeguarding digital transactions and protecting customer data (Nepal
Rastra Bank, 2022). These regulations include stringent requirements for cybersecurity
measures, data protection, and operational resilience to mitigate risks associated with
digital banking (Shrestha & Thapa, 2020). By enforcing these guidelines, NRB aims to
maintain trust in digital banking and support its continued growth in a secure environment.
 12

3.5.2 Cybersecurity Threats

The rise in digital transactions has exposed banks to increased risks of cyber-attacks,
making data security and fraud prevention critical concerns. As more transactions move
online, the potential for cyber threats such as hacking, phishing, and malware has
intensified (Shrestha & Thapa, 2020). Banks must invest in robust cybersecurity measures,
including encryption, multi-factor authentication, and regular security audits, to safeguard
sensitive customer data and prevent financial fraud (Nepal Rastra Bank, 2022). Ensuring
data security is essential for maintaining customer trust and the integrity of digital banking
services in the face of evolving cyber threats.

3.5.3 Data Privacy Issues

The collection and management of customer data in digital banking raise significant
privacy concerns, necessitating stringent adherence to data protection regulations. Banks
must ensure compliance with legal frameworks, such as the Personal Data Protection Act,
to protect the confidentiality and integrity of customer information (Nepal Rastra Bank,
2022). Effective data management practices, including secure storage, limited access, and
transparent data handling policies, are essential for safeguarding customer privacy
(Shrestha & Thapa, 2020). Adhering to these regulations helps maintain trust and prevent
breaches that could compromise sensitive information.

3.6. Case Studies

3.6.1 NIC ASIA BANK LIMITED

NIC ASIA Bank started as NIC Bank in July 1998. It got its current name after merging
with Bank of Asia Nepal in June 2013. This merger was the first between two successful
commercial banks in Nepal's history. Today, NIC ASIA is one of Nepal's top commercial
banks.

The bank handled the merger smoothly, earning praise from regulators and stakeholders.
This success encouraged other banks in Nepal to merge. After the merger, NIC ASIA was
recognized as “Bank of the Year 2013-Nepal” by The Banker, Financial Times, UK. This
is the second time that the Bank was recognized with this prestigious award, the previous
occasion being in 2007.
 13

NIC ASIA Bank is now one of Nepal's biggest private banks, with a large capital base,
balance sheet, and customer base. It has 360 branches, 45 branchless banking locations,
and 670 ATMs throughout Nepal. The bank values merit, transparency, professionalism,
teamwork, and excellent service. These values guide all the bank's business activities.

Corporate Vision:

“To ensure the creation of optimum values for all the stakeholders”

Mission Statement:

o To be a bank of 1st choice for all the stakeholders

▪ Types of information system

For the last twenty years, different kinds of information systems are developed for
different purposes, depending on the need of the business. In today’s business world,
there are varieties of information systems such as transaction processing systems
(TPS), office automation systems (OAS), management information systems (MIS),
decision support system (DSS), and executive information systems (EIS), Expert
System (ES) etc. Each plays a different role in organizational hierarchy and
management operations. The software use by NIC Asia is Finacle 2020.

This study attempts to explain the role of each type of information systems in NIC
Asia Bank Limited.

Figure 1: IS used in NIC Asia Bank

 14

1. Transaction Processing System

Transaction Processing System (TPS) plays a vital role in financial
transactions in banking sector. When evaluating and managing the risks, it is
more anticipatory and effective way to analyzing the potential risks. It helps
an organization manage its risks, enhance its value and improves business
performance. On the other hand, Information system security is always a
necessity in order to deal with threats.
Transaction processing systems helps in the following ways:
o bank cash management
o check management,
o credit card transaction processing,
o money order management,
o the management of corporate clients’ cash payments,
o micro account management systems;
2. Management Information System
Management Information System is very useful tools for the purpose
of reviewing and controlling company’s operations. The main goal of this
system is to organize all data collected from every level of the company,
summarize it, and present it in that facilitates and improve the quality of the
decisions being made to increase the company’s profitability and
productivity. These systems are typically are computer-based including either
simple excel sheet or more complex platforms. The information being
collected and gathered for the system normally comes from both inside and
outside sources. People deposit and borrow money from a bank every day.
There are different types of deposits having different tenures. So also, loans
are given for short term, medium term and long-term purposes. All this
information is consolidated on daily, weekly, fortnightly, monthly, quarterly,
half yearly and annual basis. All these data are built into an information
system which provides insight to policy framers in a bank. Collectively all
these data are called Management Information System.
 15

3. Decision Supporting system

The use of DSS is becoming increasingly common. Many banks are
upgrading from management instinctive decisions to mining of data and using
it to make decisions for business growth, not only because of the bad result
they get often from the instinctive decisions but from the fact that they need
to mine the daily increase in data, look at the trends and patterns, and look for
inaccurate data to so as to make better decisions because of its wide support
for business convenience and ease of use. “Data mining can be considered as
a method that is used for a data warehouse which daily banks data are sourced
for use and new once are stored, while DSS is a tool that helps develop and
generate decisions based on the data mined.

• Uses of IT facilities and services

Major applications: The advantages accruing from computerization are three-
directional - to the customer, to the bank and to the employee.

Figure 2: IT facilities used in NIC Asia bank

I. For customer: NIC ASIA Bank Limited is aware of customer's need for new
services and plan to make them available. IT has increased the level of
competition and forced them to integrate the new technologies in order to
satisfy their customers. They have already developed and implemented
a certain number of solutions among them:
o Self-inquiry facility: Facility for logging into specified self-inquiry terminals
at the branch to inquire and view the transactions in the account.
 16

o Remote banking: Remote terminals at the customer site connected

to the respective branch through a modem, enabling the customer to make
inquiries regarding his accounts, on-line, without having to move from his
office.
o Anytime banking- Anywhere banking: Installation of ATMs which offer
non-stop cash withdrawal, remittances and inquiry facilities.
Networking of computerized branches inter-city and intra-city, will permit
customers of these branches, when interconnected, to transact from any of
these branches.
o Telebanking: A 24-hour service through which inquiries regarding balances
and transactions in the account can be made over the phone.
For customer feedback and service, the NIC Asia bank use NIC Asia
feedback portal and NIC Asia internet services. The NIC Asia is the first bank
to introduce digital voucher system in banking system.
II. For bank: During the last decade, NIC ASIA bank Limited applied IT to a wide
range of back and front office tasks in addition to a great number of new products.
The major advantages for the NIC to implement IT are:
o Availability of a wide range of inquiry facilities, assisting the bank in
business development and follow-up.
o Immediate replies to customer queries.
o Automatic and prompt carrying out of standing instructions on due
date and generation of reports.
o Generation of various IS reports and periodical returns on due dates.
o Fast and up-to-date information transfer enabling speedier decisions,
by interconnecting computerized branches and controlling offices.
III. For employee: IT has increased their productivity through the followings:
o Accurate computing of difficult task and time-consuming jobs such as
balancing and interest calculations on due dates.
o Automatic printing of covering schedules, deposit receipts, pass book
/pass sheet, freeing the staff from performing these time-consuming
 17

jobs, and enabling them to give more attention to the needs of the
customer.
o Avoidance of duplication of entries due to existence of single-point
data entry

• Communication
This Field Study Report, we have discussed what is communication, channels of
communication, types of communication in an organization, interdepartmental
communication in an organization, policies regarding communication & decision-
making approach etc. For this purpose, we have visited and studied the functions
relating to our topic of “NIC ASIA Bank Limited". Communication may be defined as
the transfer of information from sender to receiver, with the information being
understood by the receiver. The communication function is the means to unify an
organized activity, through transfer of information from one individual to another, or
from one system to another. According to NIC Asia Bank Limited, they define
communication by focusing on three objectives:
A = Attention B = Brief C = Clarity
The purpose of communication in an enterprise is to effect change. In an organization,
there can be two types of communication, i.e. internal and external. Internal
communication means communication within the organization, whereas external
communication is the communication with the outside environment.
Internal communication in NIC ASIA Bank Limited
Means of Internal Communication (office outlook, Zimbra, spark)
o Email
o Faxes
o Memo
o Telephones
o Conferencing
External Communication in NIC ASIA BANK LTD.
Means of External Communication
o Toll free Number UAN
o Video Conferencing
 18

o Audio Conferencing
o Web-site

• Organizational Structure

Figure 3: Organization Structure of NIC ASIA BANK

Since, NIC ASIA Bank has many branches that, it has divisional structure. A central
headquarters supports a number of its branches that makes their own decisions. It
allows line managers to maintain more control and accountability. Also, day to day
decision making is decentralized, so that the central team can focus in “big picture”
strategic plan.

• Ethics
Core Values and Ethics in NIC Asia Bank Limited are:
o Customer Focus: NIC prime focus is to perfect its customer service.
Customers are NIC Bank’s first priority and driving force. NIC Asia Bank wishes
to gain customer confidence and be their trusted partner.
o Quality: NIC ASIA Bank Limited believes a quality service experience is a
paramount to its customers and is strongly committed in fulfilling this ideal.
 19

o Honesty and Integrity: NIC ASIA Bank ensures the highest level of integrity to
its customers, creating an ongoing relationship of trust and confidence. It
treats its customers with honesty, fairness and respect.
o Belief in our people: NIC ASIA recognizes that employees are its most
valuable asset and competitive strength. NIC Bank respects the worth and dignity
of individual employees who devote their careers for the progress of the bank.
o Teamwork: NIC is a firm believer in team work and feel that loyal and
motivated teams can produce extraordinary results. NIC Bank is driven by a
performance culture where recognition and rewards are based on individual merit
and demonstrated track record.
o Good Corporate Governance: Effective Corporate Governance procedures are
essential to achieve and maintain public trust and confidence in any company, more
so in a banking company. NIC Bank is committed in following best practices
resulting in good corporate governance.

• Recommendations
Information system in NIC was very effective and efficient. It has been a boon to NIC
though we would like to recommend the bank on certain issues and flaws that we could
recognize during our visit and research. Following sources should be improved in order to
develop more fluency and efficiency in company’s IS:
1. User training
2. System redesign
3. Time management
4. Innovation
 20

CHAPTER IV
CONCLUSION AND ACTION IMPLICATIONS

4.1 Conclusion

Digital transformation has profoundly reshaped Nepal’s banking sector, yielding

significant advancements in service delivery, operational efficiency, and financial
inclusion. The integration of digital technologies, such as mobile banking, digital wallets,
and advanced core banking systems, has revolutionized how banks operate and interact
with customers. Enhanced service delivery through online and mobile platforms has
increased customer satisfaction and convenience, reducing the need for physical branch
visits and enabling 24/7 access to banking services.

Operational efficiency has markedly improved with the automation of routine banking
tasks, resulting in cost reductions and increased productivity. Digital platforms have
streamlined transaction processes, reduced cash handling costs, and optimized resource
allocation. Furthermore, the use of data analytics has bolstered decision-making and
personalization, allowing banks to tailor their services to meet customer needs more
effectively.

Financial inclusion has been a major beneficiary of digital transformation. By extending

banking services to remote and underserved areas, digital technologies have bridged the
gap between urban and rural financial access, empowering previously excluded
populations and contributing to economic development.

However, the rapid digitalization of the banking sector has introduced new challenges,
particularly in the realms of cybersecurity and regulatory compliance. The rise in digital
transactions has heightened exposure to cyber threats, necessitating robust security
measures to protect sensitive data and maintain customer trust. Additionally, regulatory
frameworks must continuously evolve to address the complexities of digital banking and
ensure the security and reliability of these services.

In other hand, our aim to visit NIC ASIA is to collect some information and get knowledge
about information system in the bank. NIC bank has successfully utilized its IS in providing
banking products to its customers and also in improving its organizational efficiency. It is
 21

one of the few banks which adapts quickly to the changing environment and keeps pace
with the ever-changing technology. Information system has been a boon to NIC bank. The
bank has gained lead over its competitors who lagged behind in incorporating IS in their
organizations. Today IS has played a crucial role in giving it a competitive advantage.
Though the current IS in the bank is highly beneficial, the bank is very keen on researching
new ideas to improve its IS system for better efficiency in its operations and to continue to
serve its customers effectively.

4.2 Action Implications

• Enhance Cybersecurity Measures: Banks must prioritize the implementation of

advanced cybersecurity protocols to safeguard against evolving threats. This includes
investing in encryption technologies, multi-factor authentication, and regular security
audits. Continuous monitoring and updating of security measures are essential to protect
customer data and maintain trust.
• Adapt to Regulatory Changes: Financial institutions should stay abreast of regulatory
developments and ensure compliance with new guidelines. Proactive engagement with
regulators can help banks navigate compliance challenges and align their digital services
with national standards, ensuring a secure and reliable banking environment.
• Invest in Technology and Innovation: To remain competitive, banks should continue
to invest in emerging technologies such as artificial intelligence, blockchain, and big data
analytics. Leveraging these technologies can enhance operational efficiency, improve
customer experiences, and drive innovation in banking services.
• Promote Financial Inclusion: Banks should focus on extending digital services to
underserved and remote areas to further enhance financial inclusion. Partnerships with
digital wallet providers and mobile payment solutions can support this goal, making
financial services more accessible to marginalized populations.
• Focus on Customer Experience: As customer expectations evolve, banks need to
adopt a customer-centric approach by providing personalized and seamless digital
experiences. Investing in user-friendly interfaces and tailored financial products can help
retain customers and meet their growing digital needs.
 22

• Address Job Market Shifts: The transition to digital banking has altered the job
market. Banks should invest in training and upskilling programs to equip employees with
the necessary skills for new roles in technology, cybersecurity, and FinTech. This approach
will help manage job displacement and support career growth in emerging fields.

By addressing these action points, Nepalese banks can maximize the benefits of digital
transformation while mitigating associated risks. This balanced approach will ensure sustained
growth, enhanced customer satisfaction, and a robust financial ecosystem in Nepal’s rapidly
evolving banking sector.
 23

REFERENCES
Acharya, K., & Shrestha, S. (2020). Impact of digitalization on the efficiency of banks in
Nepal. Journal of Banking and Finance, 15(3), 45-60.

Bhandari, B., & Shrestha, R. (2018). Digital banking and financial inclusion in Nepal.
Himalayan Journal of Business and Technology, 7(1), 29-39.

Bhattarai, B. (2020). The rise of digital banking in Nepal: A consumer perspective. Nepal
Journal of Banking and Finance, 14(2), 55-68.

Bista, A., & Gautam, S. (2021). Operational efficiency in Nepalese banks: The role of digital
banking. Journal of Banking and Finance, 29(4), 75-91.

Khanal, P., & Pradhan, S. (2019). Changing consumer behavior in Nepalese banking: The role
of digital banking. Nepal Journal of Economics, 11(2), 66-78.

Nepal Rastra Bank. (2022). Digital banking and its impact on the Nepalese economy.
Kathmandu: NRB Publications.

Nepal Rastra Bank. (2023). Digital banking and its impact on the Nepalese economy.
Kathmandu: NRB Publications.

NICA. (2023). Annual report 2023. Retrieved from https://www.nicasiabank.com.np

Sharma, P., & Thapa, P. (2021). Automation in Nepalese banks: Enhancing operational
efficiency through digital transformation. Journal of Financial Innovation, 9(4), 102-118.

Shrestha, D. (2020). Shifting customer behavior in Nepal's digital banking landscape. Nepal
Banking Journal, 22(3), 98-110.

Shrestha, P., & Joshi, M. (2018). Customer expectations in the digital banking era: A study of
Nepalese banks. Journal of Consumer Research, 14(2), 77-92.

Shrestha, R. (2022). Financial inclusion through digital banking in Nepal. Himalayan Journal
of Business and Technology, 8(1), 45-59.

Shrestha, R., & Thapa, S. (2020). Cybersecurity threats in Nepalese banking: A critical review.
Journal of Information Security, 12(1), 48-59.
24