EFFECTS ON BANKING ONLINE TRANSACTION DUE TO PANDEMIC

(A Case of Machhapuchchhre Bank, Bhojpur branch)

Term paper

Submitted to:

Rashmi RajKarnikar

Ashma Shrestha

Roll no: 77341015

February, 2021

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 DECLARATION
I, Ashma Shrestha, hereby declare that research project effects on banking online transaction due
to pandemic is my original work done in the year 2021 and has not been published or submitted
elsewhere for requirement of the degree. The research is done for partial fulfillment for the
requirement of master course under the supervision of Mrs. Rashmi RajKarnikar, faculty of
NOU. Any work done and data presented by others have been cited and listed in the list of
reference section.

Ashma Shrestha

77341015

ACKNOWLEDGEMENT
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First of all, I would like to express my sincere gratitude to Tribhuvan University (TU) and Nepal
open University for providing the opportunity for doing this study as a partial fulfillment of
Master Administration (MA) program.

I am thankful to Mrs.Rashmi RajKarnikar for her regular support, advice, suggestions, and
guidance throughout my work. Without her guidance this study would not have been
accomplished.

I would also like to express my sincere appreciation to Machhapuchchhre bank for giving me
permission to conduct this study on Machhapuchchhre Bank.

At Last, I would like to appreciate my family, friends, teachers and all the concerned personnel
who were part of the research directly or indirectly whose guidance, support and continuous
motivation helped me to complete my research study.

Sincerely,

Ashma Shrestha

NOU

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 Table of Content

Contents
DECLARATION............................................................................................................................ i
ACKNOWLEDGEMENT...............................................................................................................ii
LIST OF TABLES........................................................................................................................ iv
LIST OF FIGURES...................................................................................................................... v
LIST OF ABBREVIATION........................................................................................................... vi
CHAPTER I................................................................................................................................. 1
INTRODUCTION......................................................................................................................... 1
1.1 Introduction........................................................................................................................ 1
1.2 Study Problem.................................................................................................................... 6
1.3 Objectives of the Study......................................................................................................6
1.4 Significance of the Study....................................................................................................6
1.5 Delimitation of the Study....................................................................................................7
CHAPTER II................................................................................................................................ 8
RESEARCH METHODOLOGY....................................................................................................8
2.1 Research Design................................................................................................................ 8
2.2 Methods of Data Analysis...................................................................................................8
CHAPTER III............................................................................................................................... 9
OBSERVATION AND ANALYSIS................................................................................................9
3.1 Data Presentation and Analysis.........................................................................................9
3.2 Economic of return to scale..............................................................................................11
3.3 Economic of scope........................................................................................................... 11
3.4 Positive externalities.........................................................................................................11
3.5 Negative externalities.......................................................................................................12
CHAPTER IV............................................................................................................................. 13
SUMMARY, DISCUSSION AND SUGGESTION.......................................................................13
4.1 Summary.......................................................................................................................... 13
4.2 Suggestions..................................................................................................................... 13
4.2.1 Suggestion to the machhapuchchhre and many other organizations:........................13
REFERENCES....................................................................................................................... 14

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iv
 LIST OF TABLES

Table 1. 1 Fee on ATM services..................................................................................................2

Table 1. 2 Transaction Limit.........................................................................................................3
Table 1. 3 Transaction Limit.........................................................................................................5
Y
Table 3. 1 Numbers of subscribers/users....................................................................................9

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 LIST OF FIGURES

Figure 3. 1 Increase in the numbers of Subscribers/users.........................................................10

Figure 3. 2 Percentage Increase in subscribers/users...............................................................10

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 LIST OF ABBREVIATION

ATM Automatic teller machine

IME International money Express

IPS Interbank payment system

MBL Machhapuchchhre bank limited

M3 Machhapuchchhre mobile money

MS-Excel Microsoft-Excel

NOU Nepal Open university

NPR Nepalese Rupees

NTC Nepal telecom

QR Quick Response

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 CHAPTER I
INTRODUCTION
1.1 Introduction

Banking online means accessing bank account and carrying out financial transactions through the
internet on smartphone, tablet or computer. It’s quick, usually free and allows to carry out a
number of tasks such as paying bills and transferring money, without having to visit or call bank.
Many banks also have free apps which let use these services from smartphone or tablet.

Most banks let to use online account to:

 Check bank balance at any time
 Pay bills and transfer money to other accounts
 Check any linked mortgages, loans, savings accounts or ISAs
 Check bank statements and go paperless (stop getting paper bills sent)
 Set up or cancel direct debits and standing orders
 Check on any investments that might have linked to account

Product of MBL

 Debit Card
 MBL Mobile Money (M3)
 QR Payment
 Internet Banking
 MBL Credit Card
 Internet Banking
 MBL Dollar Prepaid Card
 MBL ATMs

1.1.1. Debit card

Machhapuchchhre Bank’s widespread network of ATMs makes it easy and convenient for
customers to bank 24 hours a day. With MBL ATMs spread all over Nepal ensure that can easily
transact from ATM network. User-friendly graphic screens and easy to follow instructions in
both English and Nepali language of choice makes ATM Banking a smooth experience. Debit
card issued by Visa and Union Pay are accepted at all ATM points of Machhapuchchhre Bank
Limited.

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Table 1. 1 Fee on ATM services

Domestic International

Visa Network Visa Network

Visa Network ATMs
MBL ATMs ATMs (In ATMs (In
(Outside Nepal and India)
Nepal) India)
Transactio
Cash
n Free NPR 20/- NPR 250/-
withdrawal

Balance
Free Free NPR 50/-
Inquiry

Mini
Free Not Allowed Not Allowed
Statement

PIN
Free Not Allowed Not Allowed Not Allowed
Change

1.1.2. MBL Mobile Money (M3)

MBL Mobile Money is a mobile based application which allows customers to perform a number
of financial and non-financial transactions while away from bank and computer through a
Smartphone or other cellular device.

Features:

 Account Information: Balance enquiry, Mini-statements, checking of account history,

Access to loan statements, credit card statements
 Transfers: Intra and interbank fund transfers, Micro-payment handling
 Online payments: Airlines, Internet, Electricity, television. Water, Schools, Tours and
travels, credit card bill payment, Insurance and other services
 QR payments: Payments through scanning QR codes
 Wallet Load: Load fund in Digital wallets such as eSewa, Khalti, IME Pay and other
wallet services
 Top ups and Recharge: such as Ncell, NTC, Smart and more
 Support: lodge dispute, status of requests for dispute, Branches and ATM Location, etc.

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  Request: Loan request, LC guarantee request, Debit Card, Credit Card, Re-pin for card
services, Card block/open request, Open Internet Banking
 Content Services: General information such as weather updates, news, MBL
information’s, banking awareness, Exchange rates, banking hours
 Other banking services: Open fixed deposit

Requirements and Procedure:

 To avail M3 service, customers should maintain account in any of branches of

Machhapuchchhre bank Limited.
 Customer can fill-up Mobile banking form and submit it to the nearest branch of
Machhapuchchhre Bank Limited.

Table 1. 2 Transaction Limit

Types of Transaction Per Transaction Per day Per month

Fund transfer/ QR code NPR 50,000/- NPR 100,000/- NPR 1,000,000/-

payment

Wallet Load NPR 25,000/- NPR 100,000/- NPR 500,000/-

1.1.3. QR-Payment

QR payment is a service which allows customers to make payments to a seller/merchant for

goods and services and/or to perform a transfer to a Beneficiary using a unique two-dimensional
quick-response (QR) code generated by the merchant/beneficiary. MBL offers merchant
enrollment in QR payment services offered by Fonepay and We Chat Pay for different business
entities.

QR payments are anticipated to be one of the most sought-after payment solutions in near future.
The Fonepay QR Codes issued by MBL can be used for accepting payments from eSewa and
mobile banking applications of more than 58 different banks and financial institutions, while We
Chat Pay QR Codes can be used for accepting international payments from We Chat application.

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Features:

 Quick alternative payment option

 Lower charge than POS – less Merchant Service Fee (MSF).
 Merchants can withdraw money to their bank account instantly.
 Wider acceptance – accessible from more than 50 Banks and financial institutions.
 Auto settlement on a daily basis.
 Complies with the Value Added Tax (VAT) refund scheme of the government.

Documents Required:

 A valid account in MBL, either individual or non-individual

 Duly filled Merchant Registration Form
 Duly signed and stamped Merchant Establishment Agreement Form
 PAN, Registration and Citizenship document of the merchant

1.1.4. Internet Banking

Online Banking is a digital service to perform banking activities via the internet using a web
browser. Online Banking is a convenient way to do banking from the comfort staying home or
office. Avoid the queue or delays and try simple and secure internet Banking facility for an
unmatched online banking experience.

Features:

I. Individual Module
 General Information (display balances, activities, upcoming payments, switch
account and more)
 Statement views for 90 days
 View Credit card details and credit card payment
 Fund transfer (IBFT, IPS)
 Open fixed deposit
 Utility Payment (PSTN, ADSL & POSTPAID, NEA)
 NTC/NCELL top-up and recharge
 Wallet Load
 New services will be added consistently

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 2. Corporate Module

 General Information (display balances, activities, upcoming payments, switch

account and more)
 General Information and statement view for 90 days. Fund transfer (IBFT,
IPS)
 Employee management User creation (Initiator, Approver)
 Payroll Management Tax payment
 Utility Payment (PSTN, ADSL & POSTPAID, NEA)
 Wallet Load
 New services will be added consistently

Table 1. 3 Transaction Limit

Maximum Amount Per Day (Merchant Payment/Account Transfer) NPR 1,000,000/-

Maximum Amount Per Transaction NPR 1,000,000/-

Maximum Transaction Per Day NPR 10/-

Maximum Amount Per Month NPR 5,000,000/-

As the pandemic creates massive change and affects all the organization there are certain
changes done in context to make customers feel easy to deal with the banking transaction.
Activities done after Covid-19 Outbreak

Major activities carried out by the bank to ease to the public from the discomfort caused by
Covid-19 pandemic are as below:

● Removal of off-us ATM withdrawals charges.

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 ● Extend transaction limit on ATM Withdrawal, Card Transactions, POS Transaction,
Mobile Banking, Internet Banking, OR Code, Wallet Transaction etc.

Reason of exponential growth of digital banking services

a. Growth of broadband Internet penetration

As per the latest MIS report from Nepal Telecommunication Authority (Baisakh 2077)
broadband Internet penetration has reached 72.22% in Nepal. This has largely been possible
because of mobile broadband 3G & 4G services. People from urban areas to remote villages have
access to mobile internet now.

b. Anytime, anywhere banking service

A physical branch normally operates from 10AM to 5PM, six days a week. Whereas, with digital
banking customer can access banking services 24/7. This too has played a major role in the
adoption of digital banking.

c. Cost-effective, faster, and easier banking service

With banking services at fingertips customer no longer have to visit a physical bank branch to
access various banking services. Bank can activate mobile & Internet banking service at just
250-300 rupees per year and access banking service anytime, and from anywhere.

1.2 Study Problem

The pandemic has created a situation where people are unable to visit banks for financial
transactions like deposit, withdrawal and their financial transaction statement and other services.
This pandemic gave people a fresh enlightenment towards banking online transactions and
benefits. Due to this situation commercial banks have focused on digital transactions like mobile
banking, ATM, Internet Banking QR code and other services for accessibility of the banking
services by the general public. The main purpose of this study is to analyses the number of
consumers using online banking transactions after a pandemic. This topic related study is not
much done in Nepal. The research is done only in the effects of mobile banking or internet
banking in context to consumer perspective.

1.3 Objectives of the Study

 To find out the effects on banking online transaction due to pandemic

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1.4 Significance of the Study

The finding of this study will benefit machhapuchchhre bank which will help them to understand
the importance of banking online transactions. This study will also generate knowledge
regarding the uses of online transaction in pandemic and its demand. The study will give fresh
insights to bankers on how they can attract the maximum number of customers by giving
knowledge regarding banking online transaction facilities. This research becomes even more
useful in the context of Nepal, which has hardly any research data available on the mentioned
subject matter.

1.5 Delimitation of the Study

1. The study confines to data of machhapuchchhre bank (Bhojpur branch) only.

2. The data collected in the study is particularly secondary data.

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 CHAPTER II
RESEARCH METHODOLOGY

This chapter deals mainly with the research methodologies which are used in the period of
research. Research means to research the problems again and again to find out something more
about the problems. Similarly, methodology refers to the various steps that are generally adopted
by a researcher in studying his research problem along with the logic behind it. Thus, research
methodology is a systematic and organized effort to investigate a specific problem that needs a
solution (Wolff and Pant 1999).

In this regard, this chapter not only deals with the research method, but also considers the logic
behind the methods which are used in the context of the research study. So, research designs,
sources of data, use of statistical tools are basically explained in this chapter. The stated
objectives in mind, both the descriptive and analytical type of research are employed. A
descriptive analysis is used because the secondary sources of empirical data have been employed
to analyze the using variables, which is related to condition and growth and prospects.

2.1 Research Design

Research design is the logical and systematic planning and directing a piece of research. It serves
as a framework for the study, guiding the collection and analysis of the data, the research
instruments to be utilized, and the sampling plan to be followed. In this study, descriptive and
analytical research design is adopted. The data are mainly secondary data as it is more analytical
and other methods cannot be used.

2.2 Methods of Data Analysis

Data analysis is an important stage of the research process. The purpose of analyzing the data is
to change it from an unprocessed form to an understandable presentation. The analysis of data
consists of organizing, tabulating, performing statistical analysis and drawing inferences.

The collected data has been analyzed and processed by the help of descriptive statistical tools
depending on the nature and requirement of the collected information like line graph. The
essential tables, charts, graphs have been presented to make the analysis simple and easy to
understand. Computer software like MS-Excel software was used to analyze the collected data.

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 CHAPTER III
OBSERVATION AND ANALYSIS
3.1 Data Presentation and Analysis

This chapter contains the analysis, discussion and interpretation of the secondary data. The
collected data were analyzed with the help of Statistical methods like MS EXCEL and
presented with the help of tabulation and various graphs and figures.

Table 3. 1 Numbers of subscribers/users

per month subscriber/user

Services Before 2020 march 2020 march-2021 percentage increase

march

ATM 150 250 66.666667

Mobile Banking 95 155 63.157895

Internet Banking 5 9 80

QR code 1 3 200

Table 3.1 shows the number of ATM, Mobile banking, Internet banking and QR code
subscription/user per month before and after pandemic. The number of subscription/users before
2020 march was 150 per month and after 2020 march the subscription/user is 250 which shows
that there is 66.67% increase in the per month subscription.

Similarly. Mobile banking subscription/user before march 2020 was 95 per month and after
2020 march the subscription/user is 155 which shows that there is 63.16% increase in per month
subscription. Similarly, Internet subscription/user before 2020 march was 5 per month and after
2020 march the subscription/user is 9 which shows that there is 80% increase in the per month
subscription. Likewise, QR code subscription/user before 2020 march was 1 per month and after
2020 march the subscription/user is 3 which shows that there is 200% increase in the per month
subscription.

Figure 3. 1 Increase in the numbers of Subscribers/users

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Figure 3. 2 Percentage Increase in subscribers/users

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The Figure 3.1 shows the Graphical representation of data of table 3.1 in the Bar daigram. Figure
3.1 shows the number of ATM, Mobile banking, Internet banking and QR code subscription/user
per month before and after pandemic horizontally and number of users vertically. The number of
subscribers/users before 2020 march was 150 per month and after 2020 march the
subscription/user is 250 which shows that there are 100 numbers of increased users per month.

Similarly. Mobile banking subscription/user before march 2020 was 95 per month and after
2020 march the subscription/user is 155 which shows that there are 60 numbers of increased
users per month. Similarly, Internet subscription/user before 2020 march was 5 per month and
after 2020 march the subscription/user is 9 which shows that there are 4 numbers of increased
users per month. Likewise, QR code subscription/user before 2020 march was 1 per month and
after 2020 march the subscription/user is 3 which shows that there 3 numbers of increased users
per month.

3.2 Economic of return to scale

With the increase in users of mobile banking, ATM and other services the company has
increased the number of staff to meet the demands of the services (customer service, queries, and
other banking services). To promote remote areas of Nepal, companies have opened vacancies
with a maximum employee requirement. Specially giving more priority to the people who are
local of that area.

With the above charts, bar diagram it shows there is increasing return to scale as the company’s
percentage increase in its services is greater than the percentage increase in its employees.

3.3 Economic of scope

With the increase in the demand of the services, the company needed more services with the
reduction of cost.

Bhojpur branch has 4 branchless branches in remote areas to give more services to remote area
people. The high demand of ATMs in remote areas and branchless banking allowed the company
to make available the required services at less cost and more effectively. so, to reduce cost for
the consumer and the company they have brought a card which has no expiry date and is
effective. The normal card cost Rs 250 for renewal but this new card cost just Rs. 50 for
renewal.

3.4 Positive externalities

The bank has introduced a new type of ATM (BLB card) services that can be used in branchless
branches. This type of service reduces the production cost of the ATM for the bank. Such
services have made it easier for the people of remote areas by providing ATM services in their

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local areas. The renewal services also reduce for the betterment of the customer as well as
attracting new customers.

With the objective of supporting the transition from rule based to attitude-based behavior, the
Bank is functioning with the following five core values:

3.4.1. Integrity

Highest level of integrity / absolute honesty in all the business conduct and dealings with
customers, staff, regulators, and other stakeholders.

3.4.2. Accessibility

Easy accessibility through traditional as well as modern means of communication.

3.4.3. Value Creation

For shareholders, customers, employees and the nation.

3.4.4. Quality Service

Through unmatched professionalism and excellent customer care.

3.4.5. Stewardship of Resources

With the feeling of ownership and accountability.

3.5 Negative externalities

Negative externalities occur when the product and/or consumption of a goods or service exerts a
negative effect on a third party independent of the transaction. An ordinary transaction involves
two parties, i.e., a consumer and the producer, who are referred to as the first and second parties
in the transaction. Any other party that is not related to the transaction is referred to as a third
party.

Every bank works to give the services but they cannot retrieve money if customers transfer their
money in the wrong account number or mobile phone. The bank will not be liable for that kind
of transaction.

The company brought the card for the branchless bank users which is cost effective but it can be
used only on the device of the BLB machine. That card cannot be used in a normal ATM
machine. They can link that card to use in an ATM machine but it will cost them more.

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 CHAPTER IV
SUMMARY, DISCUSSION AND SUGGESTION

4.1 Summary

This chapter is the summary of all the results and analysis performed in the previous chapter.
The main objective of this study is to find out the effects on banking online transactions due to
pandemic. The research also intends to find out the effects on ATM, Mobile banking, QR Code
and internet banking after the pandemic. From the information collected through secondary data
we find out that the percentage change in number of ATM users is 66.67%, mobile banking is
63.16%, internet banking is 80% and Qr code is 200%. In addition, the finding suggested that
after the pandemic the use of banking online transactions is growing rapidly and customer
demand is increasing widely. Due to technological advancement and awareness banks are
adopting new technology as well customers are also adopting themselves. The maximum number
of technology customers are using is mobile banking which has a lot of facilities like bank-to-
bank transfer (Inter banking transaction), IPS service, top up, Utility payments like (electricity,
water, cable and internet) bill payment. So, the maximum number of people are using this
facility.

4.2 Suggestions

As per the findings of this study, I as a researcher have some recommendation that could be
beneficial to many parties, such as:

4.2.1 Suggestion to the machhapuchchhre and many other organizations:

1. As this study shows that pandemic has brought effect in online banking transactions. Due
to the pandemic, the number of online transaction users is increasing with high demand.
2. Companies need to make their service more effective and easier to use.
3. Organization should focus on making their product more user friendly so that the new
user can easily know the features of the services like mobile banking features.

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REFERENCES

Beginner’s guide to online banking. (2018). Money Advice Service.

https://www.moneyadviceservice.org.uk/en/articles/beginners-guide-to-online-

banking#:%7E:text=Banking%20online%20means%20accessing%20your,visit

%20or%20call%20your%20bank

Corporate Finance Institute. (2021, January 30). Negative Externalities.

https://corporatefinanceinstitute.com/resources/knowledge/economics/negative-

externalities/#:%7E:text=Negative%20externalities%20occur%20when

%20the,third%20party%20independent%20of%20the

E. (2020, August 1). Digital Banking and Payment Trend in Nepal: Past, Present, and

Future. ESewa. https://blog.esewa.com.np/digital-banking-and-payment-trend-in-

nepal-past-present-and-future/

Machhapuchchhre Bank Limited - SmartBank #GoDigital. (2018). Machhapuchchhre

Bank Limited. https://www.machbank.com/

Opinion | Covid-19: Impact on the banking sector. (2020, April 26). Kathmandu Post.

https://kathmandupost.com/columns/2020/04/26/covid-19-impact-on-the-

banking-sector

Pettinger, T. (2021, January 21). Positive Externalities. Economics Help.

https://www.economicshelp.org/micro-economic-essays/marketfailure/positive-

externality/#:%7E:text=Definition%20of%20Positive%20Externality%3A

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%20This,you%20get%20a%20private%20benefit.&text=(positive

%20consumption%20externality),a%20benefit%20to%20a%20beekeeper.

15