A case study on e-banking and customer retention of Machhapuchchhre bank

limited at Itahari Area

BY
Saphalta Koirala
LUC Registration No. LC00023000301

A Graduate Research Proposal submitted in partial fulfillment of the

requirement for the degree of
MASTER OF BUSINESS ADMINISTRATION

At the
Green Peace Lincoln College
Faculty of Business and Accountancy

Itahari, Sunsari
August, 2021
1. Background of the Study
Explain about your topic, what…why….development and best practices
Process and ways, references must be in brackets
e- banking
The concept of “E- Banking” in Nepal is new, but it is growing bigger and better with
time. With the increase in internet consumption in Nepal, people are getting more
familiar with the digitalized process in banking activities. digitalization in the banking
sector has made the banking process and activities easy, instant and transparent. Fund
transfer, withdrawal, payment of utility bills, online account opening and many other
services are provided under e- banking in Nepal.
E- banking came into existence to overcome the obligation of bank visits and paper and
pencil work. With various types of e- banking practices available, you don’t have to
waste your time and paper to perform banking activities.
Aside from the need to change, the COVID pandemic also encouraged and pushed people
to use e- banking. People had to rely on e- banking due to the limits of lockdown. As time
proceeded, e- wallets came into play. By the end of the first wave of the COVID
pandemic in Nepal, partnerships between financial institutions and fintech (e- wallet)
companies for e- payment had gotten stronger.
Now, if we look at overall activities related to e- banking in Nepal through the lens of
banks, we can see most of the banks getting on online platforms and checking on their
competitors' work and understanding the factors that contribute to their competitors'
growth. At present, mobile banking and online banking services have become a must.
Transferring and receiving money is just one tap or click away. A study on online
banking in Nepal shows that there are 4 million mobile banking customers and 0.78
million internet banking customers. Viewing and performing financial transactions online
or with mobile has become a normal ritual. At present, Machhapuchchhre Bank provides
e- banking services like Internet Banking, Mobile Banking ,Viber banking , QR Merchant
payment (Customers can scan QR Codes and make payments) etc. Machhapuchchhre
Bank is a leader in the Nepali Banking Industry. It aspires to provide each Nepali with
the best offline and online banking services. The major attraction of machhapuchchhre
Bank is its amazing schemes for customers and its unwavering 24/7 customer service.
With its various branches, machhapuchchhre Bank operates its offline banking service,
while with its official website, it operates online banking. For more secure e- banking,
customers can download machhapuchchhre Bank App and enjoy e- banking services
more comfortably.
Customer retention
Customer retention is a business’s ability to keep existing customers and continue to
generate revenue from them. Bank uses different tactics to convert first-time customers
into repeating customers. In other words, customer retention allows the bank to increase
the profitability of an existing customer and maximize their lifetime value (LTV).
customer retention is focused on existing customers. One oft-cited rule of thumb is that it
costs five times as much to acquire a new customer as it does to retain an existing
customer. Two of the most important factors in improving customer retention is
understanding the customers’ satisfaction and loyalty. Banking industry also need to
understand any operations that may turn off potential and existing customers, such as
slow or poor customer service or a faulty product. Customers tend to move on for a
myriad of reasons, which can include poor customer service, too much friction in the
banking process and a lack of perceived value. This is why it’s a good idea to map out the
customer journey to know where the leaks are. It’s also a best practice to solicit customer
feedback and incorporate it into the company’s larger plans. Best practices for improving
customer retention includes that we must follow up the customer, make affordale interest
on loan, support the view and grievence of customer, conduct different types of
awareness program regarding banking activities, rules and regualtions regarding loans
and deposits etc. In this manner we can sustain customer retention in bank.

1.2 Banking industry:

Banking industry is a network of financial institutions licensed by the state to supply
banking services. The principal services offered relate to storing, transferring, extending
credit against, or managing the risks associated with holding various forms of wealth.
The precise bundle of financial services offered at any given time has varied considerably
across institutions, across time, and across jurisdictions, evolving in step with changes in
the regulation of the industry, the development of the economy, and advances in
information and communications technologies.
E- banking is part of the broader context for the move to online banking, where banking
services are delivered over the internet. The shift from traditional to e- banking has been
gradual and remains ongoing, and is constituted by differing degrees of banking service
digitization. E- banking involves high levels of process automation and web-based
services and may include APIs enabling cross-institutional service composition to deliver
banking products and provide transactions. It provides the ability for users to access
financial data through desktop, mobile and ATM services thus helping in gaining
maximum number of customer which can increase customer retention.
2. Statement of the problem
Explain about what things you want to know?
E banking is a new trend in banking sector and is emerging in high speed. Without e
banking, nowadays no any cutomer is happy making their account in bank and saving the
money. Every customer wants easy work. Science and technology has brought new
concept and now every customer can use their e banking services without taking any
footstep from their place. This research is conducted to know how far e banking has
reached to it's customer and what about those banking customers who is out of internet
access in their home. The impact of e-banking of machhapuchchhre bank is enormous
and has great impact in Itahari Area. It has equally affected different places and corners
of Itahari zone. E banking has made a great impact in the lifestyle of the people residing
in itahari zone. Every day, going to the bank to make cash transactions or withdraw
money or go to the market to buy things and essential commodities is now quite difficult
since there is no time, the people are being busy in their work and, So, in these
circumstances, e-banking has become an integral part of the customer. A review of the
banking industry’s response to on-linecommerce suggests that even as recently as five
 years ago, banks’ involvement with the Internet was quite limited. A bank might set up a
web site to provide consumers with information about its services. Actual banking
transactions, however, still took place at different branch, through the mail, by telephone,
or over theautomated teller machine (ATM) network.In the last few years, however,
many banks have begun to use the Internet as a supplementary channel for delivering
traditional products to consumers and businesses. This research is mainly conducted to
know the overall e banking users and impact provided by e banking to the lifestyle of the
customer in today's aspect as well as future aspects. I would also like to find out how far
this bank has reached to gain customer retention. I am confirm that this research may
provide some aid for bank in their strategic planning process.
3. Purpose of the study
Aim of the research conduct
Average 5 objecives
Must give answer to research questions
 To find out the impacts to customer due to inter relationship between e
Banking and banking industry.
 To know about the opportunities e-banking providing for the growth of
Machhapuchchhre bank in Itahari Zone.
 To reveal the level of use of e-banking by Customers in the banking industry
as part of their life.
 To find out the major challenges faced by bank and existing customers of
machhapuchchhre bank and customer residing over itahari zone.
 To know how e baking has provide aid in gaining customer retention at
machhapuchchhre bank.

4. Research questions/ hypothesis

Wh questions of propose of the study
 What are the impacts to customer due to inter relationship between e Banking and
banking industry?
 Is e- banking flourishing in itahari Area? Is it affordable to all costumer living in itahari
Area?
 How e commerce is benefiting to customer, machhapuchchhre bank and society at Itahari
Zone?
 What are the major impacts of e banking in machhapuchchhre bank?
 What are the opportunities e-commerce providing for the growth of Machhapuchchhre
bank in Itahari Zone?
 What is the level of use of e-banking by Customers in the banking industry as part of
their life?
 What are the major challenges faced by bank and existing customers of
machhapuchchhre bank and customer residing over itahari zone?
 What strategies or plans can be put in place to surmount the challenges faced?
 How bank is gaining customer retention through e banking?

5. Rationale of the study

Why this researh is important?
What benefit does this research provides to this institution?
Explain in 2 paragraph
The usage of e-banking by this bank came into existence in mid 90’s.e banking came
into existence in greater numbers because of low operating costs. First it is in the
form of ATM’s and phone transactions. Recently it transformed to internet a new
channel between customers and banks which benefits both. The main aim of e-
banking services is to provide the customers a much faster services with low cost.
From the last twenty years, banking sector has chosen a new method of banking
based on the progress of information technology. In addition to these customers,
transaction and communication abilities are fastened based on information
technology.
The progress of electronic banking started with use of automatic teller machines and
afterwards it developed to online banking. In the future it will be done in mobile
 phones(wap-enabled).Anyway online banking continues to be the best for financial
transactions.
E-banking provides many advantages for banks and customer’s. E-banking has made
life much easier and banking much faster for both customers and banks. It saves time
spent in banks. It provides ways for international banking. It provides banking
throughout the year 24/7 days from any place have internet access. It provides well-
organized cash management for internet optimization It provides convenience in
terms of capital, labour, time all the resources needed to make a transaction. Taking
advantage of integrated banking services, banks may compete in new markets, can get
new customers and grow their market share. It provides some security and privacy to
customers, by using state-of-the-art encryption and security technologies.

6. Literature Review
At least 5
Objectives scope methdology findings strength weakness
What are needed to be focused now?
Ghimire (2013): - A thesis report entitled “The effect of electronic banking on the
financial performance of commercial banks” and her findings were e banking has a
strong and significant effect on profitability of commercial banks.
Shah (2016): - A thesis report entitled “impact of electronic banking services on banking
transactions.” and his findings were electronic services has contributed to economy of
time because many bank transactions are now performed directly through ATM. The
electronic form of banking provides the ease to customer as well as officials to get
through the process by electronic delivery channels.
Shrestha (2015): - A thesis report entitled “Impact of e-commerce on Business values in
an organization” and his findings were e- commerce has maximum impact on brand
image. It increases customer retention. It also helps in product promotion. E-commerce
plays a vital role in customer relationship management.
 7. Research methods

This part includes various methods and techniques used by the researcher during the
course of gathering relevant information from the field. It also describes methods and
techniques usedi.e. Research design, target population, sample design, data collection
procedures and dataanalysis.
7.1 Research design
According to Kothari (2008), research design is the conceptual structure within which
research isconducted, it constitutes the blueprint for the collection, measurement and
analysis of data assuch the design includes an outline of what the researcher did from
writing the hypothesis and itsoperational implications to the final analysis of data.
The researcher used a descriptive research design, where qualitative and quantitative
approachwill be used. In quantitative approach the researcher employed data in form of
numbers collected from employees on e-banking and performance of financial
institutions. Qualitative was usedthrough interviews in order to describe the activities and
its impact of e-banking on performanceof financial institutions
7.2 Source of Data
The sources are:
 Primary sources
 Secondary sources
7.2.1 Primary sources:
I will collect primary information by interviewing employees, officers of the different
commercials banks by visiting the bank individually, by observing various organizational
procedures, structures, directly communicating with customers and clients of the
commercial banks. Primary data will mostly derive from the discussion with the
employees and personal experience during the learning period. Primary information will
be considered in the following manner:
 Face to face conversation with officers in the commercial banks.
 Face to face conversation with clients in the commercials banks.
 Hearing the conversation between officers and clients in the banks.
7.2.2 Secondary Sources:
I will take the help of different types of secondary data in my report. The sources of those
can be categorized as follows:
 Annual reports, publications, internet and other materials related to e commerce and e-
banking.
 Periodical statements of the bank brochures, booklets etc.
 Website of the commercial banks.
 Different department wise operational manual of the bank.
7.3 Data analysis
The data collected was processed and analyzed. This involved data coding, editingand
tabulation especially quantitative data. The purpose of all these is to make the
informationclear and understandable for other people. Qualitative analysis techniques
were used. TheQualitative analysis techniques were complemented with some statistics
that were mainlyobtained from the secondary data that were obtained through
documentary analysis from the casestudy organization. A few statistics to be obtained
from the primary data and was included in thisresearch.
8. Limitations of the study
This study has following limitations:
 The study is limited to small area.
 Only one bank has been considered to find out the result.
 Data may be fluctuate.
 Because of SWOT
 Lack of data accuracy

9. Expected output
Write about upcoming result
  Impacts to customer due to inter relationship between e Banking and banking
industry.
 The opportunities e-banking providing for the growth of Machhapuchchhre
bank in Itahari Zone.
 The level of use of e-banking by Customers in the banking industry as part of
their life.
 The major challenges faced by bank and existing customers of
machhapuchchhre bank and customer residing over itahari zone.
 e baking has provide aid in gaining customer retention at machhapuchchhre
bank.

10. Time Schedule

Time Schedule
List of activities Estimated time (Days)

Background of the study 3

Problem statement 5

Objectives of the study 2

Research questions 3

Definition of variables 2

Scope and significance of 1

study
Limitation of the study 2

Outline of the report 1

Literature review 5
Research design
Population and sampling 2
Sampling technique
2
Nature and sources of data 2
Research framework
Variable selection 2
Statistical analysis of data
Software used 2
Sudy models
2
Presentation of data
Intrepretation of data 2
Major findings
Conclusion 1
Implications
Priliminary parts 2

Total time taken 40

References
Ghimire, R. (2013). A case study: Effect of electronic banking on financial performance
of commercial banks. New Baneshwor, Kathmandu: Sai books Centre.
Salim, M. (2002). A case study : Impact of e commerce on business value in an
organization. Noida, India: Ravi press centre.
Shah, S. (2016). A case study: Impact of electronic banking services on banking
transactions. Dang: Shree Krishna publishers.
Shrestha, M. (2015). A case study: Impact of E- banking in an organization. Lalitpur:
Shree Neeketan Publishers
https://www.investopedia.com/terms/e/ecommerce/ (visit date: 2021/08/11 12.25 pm)
https://www.securitymagazine.com/articles/ (visit date: 2021/08/11 12.33 pm)
https://www.encyclopedia.com/social-sciences/applied-and-social-sciences-magazines/
banking-industry (visit date: 2021/08/11 12.41 pm)
https://www.techfunnel.com/fintech/e-commerce-in-banking (visit date: 2021/08/12 2: 06
pm)
https://www.vapulus.com/en/e--banking/(visit date: 2021/08/12 2:14 pm)
https://www.signaturebankga.com/e-banking-the-advantage-and-importance-of-internet-
banking/#:~:text=Internet%20banking%20allows%20for%20the,when%20the
%20transaction%20is%20complete. 8.20 pm poush 1
https://www.ukessays.com/essays/information-technology/importance-of-e-banking.php