DIGITAL BANKING: STATUS, EFFECTIVENESS AND

CHALLENGES

(With reference to Nepal Bank Limited, Kushma Branch)

BY

Govinda Prasad Bastola

T.U. Regd. No: 7-2-53-10-2018

Symbol No: 21035/18

A Summer Project Report

Submitted to

Faculty of Management

Tribhuvan University

In partial fulfillment of the requirements for the degree of Bachelor of Business

Administration (BBA)

at the

Dhawalagiri Multiple Campus

Tribhuvan University

Baglung

April 2023
 STUDENT DECLARATION

This is to certify that I have completed the Summer Project entitled Digital Banking:
Status Effectiveness and Challenges under the guidance of Resham Lal Sapkota in
partial fulfillment of the requirements for the degree of Bachelor of Business
Administration at Faculty of Management, Tribhuvan University. This is my original
work and I have not submitted it earlier elsewhere.

Date: April 07, 2023

Signature

Govinda Prasad Bastola

 CERTIFICATE FROM THE SUPERVISOR

This is to certify that the summer project entitled Digital Banking: Status
Effectiveness and Challenges is an academic work done by Govinda Prasad
Bastola submitted in the partial fulfillment of the requirements for the degree of
Bachelor of Business Administration at Faculty of Management, Tribhuvan
University under my guidance and supervision. To the best of my knowledge, the
information presented by him in the summer project report has not been submitted
earlier.

______________________

Signature of the Supervisor

Resham Lal Sapkota

Teacher at Dhawalagiri Multiple Campus

Date:
 LETTER OF APPROVAL

The summer project entitled Digital Banking: Status Effectiveness and Challenges
has been submitted by Govinda Prasad Bastola for the final examinations to the
Faculty of Management, Tribhuvan University, in partial fulfillment of the
requirement for the degree in Bachelor of Business Administration. The
Management Research Committee of this campus has found this summer project
report satisfactory in scope and quality and has therefore forwarded it for
examination.

______________________

Signature

Ram Raja Kandel

Chairperson, Management Research Committee

Date:
 ACKNOWLEDGEMENT

This summer project report entitled “Digital : status, effectiveness and challenges ”
has been conducted to satisfy the partial fulfillment of the requirements for the degree
of Bachelor of Business Administration (BBA), Faculty of Management, Tribhuvan
University. It is directed toward the effectiveness, problems and status of digital
banking services. This would not have been possible without the kind of support and
help of many individuals.

I would like to express my sincere gratitude to my respected supervisor Mr. Resham

Sapkota, Lecturer at Dhawalagiri multiple campus, Baglung for providing valuable
guidance to complete this project work in time. Similarly, I would like to
acknowledge Mr. John Bajracharya, coordinator of BBA of Dhawalagiri Multiple
campus, Baglung for his timely inspiration and orientation for the project report
writing.

Similarly, I would like to express my gratitude towards all teachers of Dhawalagiri

Multiple Campus, for their immense support and instruction for motivating me to
complete my report writing., I would like to express sincere gratitude to Mr.
Ramakanta Sharma, and all banks staff of Kushma branch as well as Staff and
member of Dhawalagiri Multiple Campus for the support during the project
preparation. Further, I would like to express my warm respect to my parents and my
friends for their affection and emotional support to pursue the study. I would like to
take the responsibility of any possible mistakes that may have occurred in the report. I
would be delighted to welcome readers for their suggestion and recommendation to
improve the report.

Thank You.
Govinda Prasad Bastola
 TABLE OF CONTENTS

TITLE PAGE .................................................................................................................i

STUDENT DECLARATION........................................................................................ii
CERTIFICATE FROM THE SUPERVISOR..............................................................iii
LETTER OF APPROVAL............................................................................................iv
ACKNOWLEDGEMENT.............................................................................................v
TABLE OF CONTENTS..............................................................................................vi
LIST OF TABLE........................................................................................................viii
ABBREVIATION.........................................................................................................ix
EXECUTIVE SUMMARY............................................................................................x
CHAPTER I...................................................................................................................1
INTRODUCTION..........................................................................................................1
1.1 Background of the Study.................................................................................1
1.2 Statement of Problem ......................................................................................4
1.3 Purpose of the Study........................................................................................4
1.4 Significance of This Study..............................................................................4
1.5 Literature Survey.............................................................................................5
1.6 Research Methodology..................................................................................17
1.7 Limitation of the Study..................................................................................19
1.8 Organization of the Study..............................................................................19
CHAPTER II................................................................................................................20
DATA PRESENTATION AND ANALYSIS.............................................................20
2.1 Profile of Nepal Bank Limited......................................................................20
2.2 Data Presentation and Analysis.....................................................................21
2.3 Finding and Discussion.................................................................................32
CHAPTER III...............................................................................................................35
CONCLUSION AND ACTION IMPLICATION.......................................................35
3.1 Conclusion..........................................................................................................35
3.2 Action Implication..............................................................................................35
REFERENCES.............................................................................................................37
APPENDIX..................................................................................................................39
 LIST OF TABLE

Table 2-1: Number of Accounts of Nepal Bank Limited............................................22

Table 2-2: Numbers of account in kushma Branch.....................................................23

Table 2-3: Digital Banking User of Kushma Branch..................................................24

Table 2- 4: Effectiveness of the digital banking.........................................................28

Table 2- 5: Problem of the Digital Banking................................................................31

 ABBREVIATION

ABBS : Any Branch Banking System

AI : Artificial Intelligence

ATM : Automated Teller Machine

CBS : Core Banking System

DEMAT : Dematerialization Account

IB : Internet Banking

ICT : Information and Communication Technology

IT : Information Technology

NBL : Nepal Bank Limited

POS : Point Of Sale

 EXECUTIVE SUMMARY
This summer project is about the status of digital banking of Nepal Bank of Kushma
Branch and the effectiveness and problems of the digital banking services. This study
aims to assess the status, analyze service effectiveness and assess problems of the
digital banking. This project can be used to improve the digital banking system by
addressing the challenges faced by users and making the system more user-friendly and
secure. Primary and secondary data are used in this research, which is collected by
multiple time bank visit and google forms questionnaire. Descriptive research design is
used in this research, this research is based on qualitative as well quantitative data.
Technology Acceptance Model (TAM) theory and Trust theory are used to as
instruments for conducting research. Data are presented by visualization tools by using
table analyze by using several parameters. There are several parameters are used to
measure the effectiveness and problems of the digital banking. Easy to use, security,
Reliable, Saving time, Convenience, 24/7 availability are the several parameter which
are used to measure the effectiveness of digital banking. Similarly Availability,
Security, Technical issues, Hacking, Delay in response, Burden to customers and
Transfer limit are the parameters to measure the problems of the digital banking. The
finding of this report are: - (i) ATM and mobile banking the most common form of
digital banking.(ii)The finding of the survey which is conducted to measure the
effectiveness of the digital banking is that the digital banking is effective in terms of
easy to use, security, reliability, saving time, convenience, availability, cost effective,
personalization and complaints facing and problems solving(iii)According to finding of
the survey availability, security, delay in response, burden to customer are minor
problems whereas technical issues, hacking and the transfer limit is the major problems.
Recommendation for the bank for improving effectiveness and reducing the problems
of digital banking are: - i) the bank must aware the public about the advantages and
ways of using digital services. (ii) I recommend the bank for the improve security,
improved reliability, reduce the price for digital banking services, and handle the
complaints in time and solve the problems in time for improving the effectiveness of the
digital banking services of the banks. (iii)The bank must improve security, increase
transfer limit, reduces technical issues, server down issues for minimizing the problems
of digital banking.
Key words:- Digital banking, technology acceptance model , trust theory, availability,
technical issues.
 CHAPTER I

INTRODUCTION

1.1 Background of the Study

A bank is a financial institution that accepts deposits from the public and creates a
demand deposit while simultaneously making loans. Bank is an institution that deals
in money and its substitutes and provides other money-related services.

The idea of banks began as long ago as 1,800 BC in Babylon. In those days
moneylenders made loans to people. In Greece and Rome banks made loans and
accepted deposits. They also changed money. (In the Bible Jesus famously drove the
money changers out of the temple in Jerusalem).However, with the collapse of the
Roman Empire trade slumped and banks temporarily vanished. However, banking
began to revive again in the 12th and 13th centuries in the Italian towns of Florence
and Genoa.

Nepal Bank Limited established in 1937 A.D was the first commercial bank in Nepal
to provide financial facilities to the people. It was initiated by King Tribhuvan Bir
Bikram Shah Dev on 30th Kartik 1994 B.S. This contribution is considered as the
milestone in the banking history of Nepal.

The digital transformation and less paper-banking model over the traditional banking
processes have enabled banks to deliver customer-centric services. Digital Banking
is the automation of traditional banking that enables customers to access banking
services using online and electronic platforms.

The earliest forms of digital banking trace back to the advent of ATMs and cards
launched in the 1960s. As the internet emerged in the 1980s with early broadband,
digital networks began to connect retailers with suppliers and consumers to develop
needs for early online catalogues and inventory software systems. By the 1990s
the Internet became widely available and online banking started becoming the norm.
The improvement of broadband and ecommerce systems in the early 2000s led to
what resembled the modern digital banking world today. The proliferation
of smartphones through the next decade opened the door for transactions on the go
beyond ATM machines. Over 60% of consumers now use their smartphones as the
preferred method for digital banking.
 There is a demand for end-to-end consistency and for services, optimized
on convenience and user experience. The market provides cross platform front ends,
enabling purchase decisions based on available technology such as mobile devices,
with a desktop or Smart TV at home. In order for banks to meet consumer demands,
they need to keep focusing on improving digital technology that
provides agility, scalability and efficiency.

The Digital Banking transition took a long period in the context of Nepal. Banking in
Nepal started off with Nepal Bank Limited established in 1937, the first commercial
bank of Nepal. In 1990, modern banking started in Nepal with the introduction of
credit cards by Nabil Bank. Likewise, Himalayan Bank introduced ATM and credit
cards in 1995. After that, Kumari bank incepted Internet Banking in 2001. In 2004,
Laxmi bank introduced SMS banking and launched the mobile banking platform
“Mobile Khata” in 2012.

Over the past two decades, the digital banking scenario elevated along with
improvements in information technology. Internet penetration expanded to 82.79
percent of the population in mid-Jan 2021. With the internet penetration expansion
and the rise of smartphone users, digital banking in Nepal is gradually leaping over
traditional banking.

Digital banking can be as the use of electronic delivery channels for banking product
and service and is a subset of electronic finance. Modern and traditional banking
services are delivered automatically, quickly, and effectively through electronic and
communication means. A key factor in raising service delivery standards in the
banking sector is the system that customers utilize to access accounts, conduct
business, and acquire information. Offering small-value and retail banking products
and services through digital channels is known as e-banking. Taking deposits,
lending, managing accounts, giving financial advice, accepting electronic bill
payments, and providing other electronic payment products and services, like
electronic money, are a few examples of such products and services. According to
S.H. Manzoor introduction of Electronic banking has undergone a revolution and a
redefinition, and the number of banks that provide financial services online is steadily
rising (Manzoor, 2011).

2
1.1.1 Company Profile

Nepal Bank Limited established in 1937 A.D was the first commercial bank in Nepal
to provide financial facilities to the people. It was initiated by King Tribhuvan Bir
Bikram Shah Dev on 30th Kartik 1994 B.S. This contribution is considered as the
milestone in the banking history of Nepal. It was formed under the co-operation
between government and the general public with the certified capital of NPR 10
million and the paid-up capital of NPR 892 thousand. Until 1940 A.D the monetary
system was based on metallic coins. Nepal Bank Limited remained as the sole
financial institution until 1956 A.D when Nepal Rastriya Bank, also known as the
central bank of Nepal these days was established. Nepal Rastriya Bank makes
strategies for the banking sector in Nepal.

1.1.2 Introduction of Digital Banking

Digital banking refers to the delivery of banking and financial services through digital
channels, such as mobile apps, online banking websites, and ATMs. It allows
customers to manage their financial accounts, make transactions, and access various
financial services without visiting a physical bank branch. Digital banking provides
the customers with 24/7 accessibility, convenience, and efficiency, as well as a range
of services such as account management, bill payments, fund transfers, and
investment management. Additionally, digital banking often offers a more
personalized and secure experience through features such as biometric authentication
and real-time alerts. With the increasing adoption of digital technology, digital
banking has become a key component of the banking industry and is rapidly changing
the way customers interact with their financial institutions.

Digital Banking is the automation of traditional banking that enables customers to

access banking services using online and electronic platforms. There are various
digital banking services which is offered by the Nepal bank, those services are:-

 E-Banking (Internet Banking)

 Mobile Banking
 Plastic Cards
 Automated Teller Machine (ATM) and Point of Sale (POS) Machine.

3
1.2 Statement of Problem

The Nepal commercial banking industry is still developing stages. The core banking
business is mobilizing the deposit and utilizing it for lending it to industry and
individual user. Bank not only performs the task of taking deposit and lending, it also
provides the various facilities and services to the customers through digital medium or
internet, which is known as the digital banking utilities. Those services include mobile
banking ATM services, credit card facilities, issuing electronic cheque, e-cash, C-
ASBA services, ABBS etc. The project which I will conduct is about the impact
mobile banking services to users. The summer project is directed to the resolve the
following problems.

 What is the status of digital banking of Nepal bank in kushma?

 What are the problems and issue related to the digital banking services
provided by the Nepal Bank?
 How much effective digital banking services are?

1.3 Purpose of the Study

The purpose of the study behind the research is find out the status of digital banking
of Nepal bank limited, kushma branch. It provide the knowledge on the digital
banking utilities.

 To identify status of digital banking of Nepal bank in kushma.

 To assess the problem regarding digital banking.
 To analyze Service effectiveness of digital banking.

1.4 Significance of This Study

The research on the topic of "Digital Banking: status, effectiveness, and problems" is
significant for several reasons:

 Understanding the current state of digital banking: Digital banking has become
increasingly popular in recent years, and this research provides valuable
insights into the current state and adoption of digital banking services. It helps
stakeholders to understand the current status of digital banking in terms of
usage and popularity, which can inform future development and growth
strategies.

4
  Assessing the effectiveness of digital banking: By studying the effectiveness
of digital banking, the research helps banks, financial institutions, and other
stakeholders to understand the impact of digital banking on customer
satisfaction, financial inclusion, and other important metrics. This information
is critical for continuous improvement of digital banking services.
 Identifying and addressing problems: The research can identify the problems
and challenges that customers and financial institutions face with digital
banking. This information can be used to address these issues and make digital
banking more user-friendly, secure, and accessible to a wider audience.
 Improving financial literacy: The research can also help to improve financial
literacy by providing information on digital banking services and the benefits
they offer. This information can help individuals and businesses to make
informed decisions about their financial management.

Overall, the research on "Digital Banking: status, effectiveness, and problems" is

crucial for the continuous development and improvement of digital banking services,
and for ensuring that they meet the needs and expectations of customers and
stakeholders.

1.5 Literature Survey

A literature review is a comprehensive summary and critical evaluation of the existing

research on a particular topic. It is an important component of research in any
academic field, including the study of digital banking. The purpose of a literature
review is to examine the existing knowledge and understanding of a topic, identify
gaps in the research, and provide a context for the current study. The purpose of a
literature review is to gain an understanding of the existing research and debates
relevant to a particular topic or area of study, and to present that knowledge in the
form of a written report.

In the context of digital banking, a literature review would involve reviewing and
synthesizing the existing research on topics such as the adoption and use of digital
banking services, the factors that influence customer behavior, the security and
privacy concerns associated with digital banking, and the impact of digital banking on
the traditional banking industry. The literature review would also examine the

5
research methods and findings of previous studies, and identify areas for future
research.

A well-conducted literature review is essential for several reasons. It helps to establish

the foundation of knowledge for a given topic and provides a basis for the current
study. It also helps to identify the strengths and weaknesses of previous research and
provides insights into the current state of the field. Additionally, a literature review
helps to avoid duplication of effort and to ensure that the current study contributes to
the existing body of knowledge.

In conclusion, a literature review is a crucial component of research in digital banking

as it provides an overview of the existing knowledge and understanding of the topic,
identifies gaps in the research, and provides a context for the current study. It helps to
ensure that the research is well-informed, relevant, and makes a valuable contribution
to the field.

1.5.1 Conceptual Review

There are several theories related to digital banking that attempt to explain and
understand the adoption, usage, and impact of digital banking services. Those theories
are:-

Technology Acceptance Model (TAM) (Davis, 1989): This theory posits that an
individual's intention to use technology is determined by their perception of its
usefulness and ease of use. The theory has been widely used to explain and predict the
adoption and usage of digital banking services.

Diffusion of Innovations Theory (Rogers, 2003): This theory explains how, why, and
at what rate new ideas and technologies spread through a social system. The theory
has been used to understand the factors that influence the adoption and diffusion of
digital banking services

Trust Theory (Mayer et al., 1995): This theory posits that trust is a critical factor in
the adoption and use of digital banking services. Trust in digital banking services is
influenced by factors such as security, privacy, and reliability.

Social Cognitive Theory (Bandura, 1977): This theory explains how individuals learn
and adopt new behaviors through observing the actions of others. The theory has been

6
used to explain the influence of social and peer networks on the adoption and usage of
digital banking services.

Task-Technology Fit (TTF) Theory (Goodhue & Thompson, 1995): This theory
proposes that the effectiveness of technology is determined by the fit between the
technology and the task it is designed to support. The theory has been used to
understand the factors that influence the adoption and usage of digital banking
services.

Protection Motivation Theory (Rogers, 1975): This theory explains how individuals
adopt security measures in response to perceived threats. The theory has been used to
understand the factors that influence the adoption and usage of security measures in
digital banking.

These theories provide a foundation for understanding the factors that influence the
adoption, usage, and impact of digital banking services and can be used by banks to
inform their strategies for enhancing the customer experience and driving adoption of
digital banking services.

1.5.1.1 Digital Banking Adoption

The role of information technology in the banking sector has a greater effect on
perceived service quality in public, private, and foreign banks, where innovative
products and services by banks will necessitate more improvement in services offered
to customers. Nowadays, the world is moving toward technology, and without
technology, the bank cannot even think new products and services. Customers can
perform banking transactions through Cash machines, Internet Banking, and Mobile
Banking, allowing banks to reach a diversified consumer base across geographies.
Digital banking is one of the fastest growing financial practices today, and it can be
defined as a bank's provision of information or service to the customers (Giannakoudi,
1999). Digital banking services are critical to banks' long-term survival in the world
of electronic trade (Burnham, 1996).

Technology has altered businesses and business relationship issues. Through supply
chains, autonomous structures, outsourced manufacturing, and contract warehousing
and delivery, this has made it possible to restructure design, marketing, production,
delivery, and services. Technology development has sparked sophisticated digital

7
transformation, which is not just limited to tech-savvy corporations but has also been
adopted by large, established high-tech organization (Idiegbeyan- ose, 2015)

With the introduction of the credit card, the Automatic Teller Machine, and ATM
networks in the early 1970s, the banking industry experienced an information
technology revolution, particularly in terms of distribution channels. Telephone
banking, cable television banking, and the development of personal computer banking
in the late 1980s and early 1990s came after this. Many banking tasks that were
formerly handled over the counter through physical channels can now be conducted
through electronic channels according to information technology (Giannakoudi,
1999).

The implementation of digital banking services is made possible by the bank's

standing in terms of dimensions, recognition, and trust. A customer's knowledge of
internet banking and its benefits, as well as the amount of information they have
available to them, may have a significant impact on whether or not they choose to use
it (Fink, 2005). Gan showed in previous research that user input variables depend on
control, enjoyment, and intention to use (Ganetal, 2006). The degree of effort and
participation expected of customers when using electronic banking could be referred
to as control.

The ability to adapt, technical self-efficacy, and experience with the internet banking
program have all been proven to be significant, suggesting that individual
characteristics determine the adoption decision (Thornton, 2001).

Elements Impacting Consumer acceptance of Online Banking in India to examine at

the factors that influence the adoption of internet banking. Digital banking is effect by
perceived reliability, perceived usability, and perceived convenience of use, the
authors' partial least square (PLS) model for internet banking successfully
demonstrated. When advertising online banking services, marketing experts should
emphasize the opportunities that their adoption offers, and awareness may also be
raised to draw more customers to the platform.

Factors that influence digital banking adoption among intellectuals was analyzed by
(Muzividzi, 2013). In spite of banks' best attempts to market the technology, online
banking adoption has been sluggish, according to this study. The goal of the project

8
was to pinpoint the elements that influence the uptake of digital banking in an effort
to come up with solutions. The study concentrated on experts in technology who are
more knowledgeable than the general public. At Chinhoyi University of Technology,
a total of 5000 students and academic workers were surveyed and interviewed to
gather data. From the population, 450 students and employees were chosen as a
sample. The study discovered a number of variables that impose restrictions and
promote the uptake of online banking. The two main ones were marketing exposure
and a breach in transaction security

The financial system has been attempting to learn more about the factors that
motivates customers to perform their financial transactions online (Gerrard, 2003).
The use of e-banking by consumers is being thoroughly researched by a number of
academics (Sayar, 2007). Additionally, clients who use electronic banking benefit
from superior business conditions like cheaper commission rates, dependable service
quality, and time-saving advantages in addition to having access to financial services
at any time and from any location (Yu, 2008).

1.5.1.2 Digital Banking in Nepal

A notion of self service banking was introduced in the 1980s and later powered by
ATMs as a result of the development of the internet and computer technology. With
the growth of the internet, banks began to provide banking services, which allowed
customers to see their bank statements by just logging in online. Banks began to offer
mobile banking services after technology began to move toward smart phones and
mobile data. It took approximately 53 years for Nabil Bank Ltd. to provide credit
cards in the early 1990s, following the creation of Nepal Bank Ltd. in 1937, the
country's first bank to begin operations. Himalayan Bank Ltd. played a leading role in
the development of e-banking in Nepal with the introduction of automated teller
machines (1995) and tele-banking. Customers had to wait over 65 years for internet
banking after the first bank, banking sector, and bank were established. The Kumari
Bank Ltd. launched online banking in Nepal for the first time in 200. In Nepal, despite
the advent of internet banking ten years ago, this method of banking is still not widely
used. Even though the major cities like Kathmandu, Pokhara, and Biratnagar have
decent internet infrastructure and the majority of banks offer internet banking in urban
areas, the majority of bank customers do not use it yet. According to a study, there are

9
around 200,000 internet users in Nepal, 50% of whom are located in the Kathmandu
valley. However, only a little over 3,000 (1.5%) internet users use internet banking.
One study indicated that most banks in Nepal have adopted ATM service for e-
banking, and mobile banking is becoming more and more popular, but internet
(computer-based) banking is still not available.

The use of voice-based AI (Artificial Intelligence), robot-based basic banking services

at branches, the use of robot advisers for banking and financial services, etc. are all
current emerging trends in banking services around the world. In Nepalese banks,
Pumori is the first and most used banking software system. In the 1990s, financial
services began to go digital. Debit/credit cards, ATMs, digital banking, and mobile
banking were all introduced during this decade; all of these services later raised and
were integral to all types of banks' financial services.

The base of clients using digital banking services is growing in Nepal as a result of
the expansion of the internet and smart phones. This has assisted in the availability of
banking services through a digital platform, which has considerably elevated the
regard and benefit of banks. This has decreased the friction associated with financial
services and ensures that customers receive services immediately. However, Nepalese
banking services are just beginning to go digital. The Nepalese banking industry still
has a lot of room for growth and making these services available to a wider range of
bank customers.

Due to their accessibility and utility, mobile banking apps are becoming more and
more popular. Most crucially, servicing a client through mobile banking is far less
expensive than servicing through branch banking from the perspective of a bank's
finances.

Digital banking services were initially primarily used to review account statements.

Customers lacked a good understanding of the functions and usage of digital banking.

The widespread adoption of digital banking technologies takes a very long period.
The use of the Internet and smartphones has become widespread these days.

Customers can now conduct banking transactions online and via mobile devices.

10
Banks in Nepal offer the following digital and ICT-based delivery channels: (Khalti,
2018)

1. Internet Banking

Customers who participate to internet banking using this service are able to conduct
banking transactions from a range of devices, including PCs, laptops, and cell phones.
Customers may be able to monitor their account information, exchange money
between accounts, and pay bills depending on the service the bank offers. Subscribers
can also get in touch with the bank to ask for specific banking services. In 2002,
Kumari Bank Limited introduced the country's first internet banking service, which is
now provided by the majority of commercial banks. As of mid-September 2018, the
Nepalese financial sector has 8,34,302 internet banking users.

2. Mobile Banking

Customers who are using this service are able to perform bank transactions utilizing a
portable mobile device. Message transactions are often transmitted to the bank's
system by SMS via a mobile handheld device. This service typically provides a range
of services, such as bill payment, mobile top-up, financial transfers, account
information views, and communication with the bank. In Nepal, this service was
originally established by Laxmi Bank Limited in 2004, and the majority of class "A"
banks now provide it. In Nepal, there were 50,86,069 users of mobile banking as of
mid-September 2018.

3. Plastic Cards

Another popular electronic banking channel is this one. Prepaid, debit, and credit
cards are all types of plastic cards that can be used. These cards can be used, among
other things, to extract money, pay bills at ATMs and POS terminals, and make
purchases online. The magnetic stripe on the back of the plastic card, which formerly
stored data, is being replaced by the chip-based, more secure EMV card. In 1990,
Nepal Arab Bank Limited (now NABIL bank) became the first commercial bank in
Nepal to distribute plastic cards as credit cards. As of the middle of September 2018,
Nepal had 96,816 subscribers to prepaid cards, 55,44,253 users to debit cards, and
1,04,721 subscribers to credit cards. Banks in Nepal often provide plastic cards.

4. Point-of-Sale and Automated Teller Machine

11
An ATM is a tool for taking out cash, but it can also be used to pay bills. Himalayan
Bank Limited first made it available in Nepal in 1995. The number of installed ATMs
is increasing every day, and as of mid-September 2018, there were 2,791 ATMs. An
integrated shared network of ATMs was created after the launch of SCT 2001. By
accepting various device kinds and acquiring standards, this network is facilitating
interoperability of ATM. Furthermore, there is a VISA network that enables use of a
card from one bank in an ATM from a different bank.

5. Branchless Banking

It is now easier to communicate with those who reside in remote places without
access to bank offices thanks to this relatively new electronic banking service.
Customers can use the Point of Transaction (POT) machine provided by a bank or its
branchless banking agent to access their bank accounts, transfer money to other
accounts, extract money from their accounts, and make payments for the purchase of
goods and services.

Both plastic branchless banking cards and biometrics can be used to access the
service. The most typical biometric authentication process uses a fingerprint. As of
the middle of September 2018, there were 1,30,660 branchless banking members and
1285 branchless banking locations.

6. Mobile Wallets

The newest and most popular e-banking product in Nepal is this one. This enables
users to store money in their mobile phone even if they don't have a bank account.
This is a method of payment for both products and services. Users of this product
have the option of loading funds from their bank accounts. Customers who do not
have bank accounts have been able to receive financial services thanks to this
offering. This can be an excellent instrument for financial inclusion as Nepal has a
high mobile device adoption rate and the geographic topography makes it challenging
to build banks and bank offices.

Banking services using QR codes have gained popularity across the globe thanks to
IT providers. Along with Union Pay International, Nabil Bank has introduced a QR
(Quick Response) Code Payment Service.

12
1.5.2. Review Of Previous Study

The era of modern banking in Nepal started with Nabil Bank introducing credit cards
in the early 1990s. Himalayan Bank introduced ATM and Nepali credit card for the
domestic market in 1995. In 2002, Kumari Bank introduced E-Banking (Internet
Banking) service for the first time in Nepal. Likewise, in 2004, Laxmi
Bank introduced SMS Banking (Mobile Banking) service for the first time in the
country. Digital banking is the innovative banking system on which the banking
services of the banks are provided through the internet or digital communication
system and the various function of banks are performed in digital devices. Along with
the advancement in technology, the bank also adopt the new technology to get
competitive advantage, increase customer satisfaction and survival. Digital banking is
the blessing of technological advancements.

According to NIC Asia bank, study on online banking in Nepal shows that there are 4
million mobile banking customers and 0.78 million internet banking customers.
According to swifttech.com, The total number of Mobile Banking and Internet
Banking customers as of Mid-Jan 2021 is 1.26 crores and 10.90 lakhs respectively.
According to nepalbank.com, Nepal Bank is providing various digital banking
facilities which includes: - mobile banking, ATM/debit card, QR code payment, credit
card and internet banking.59% of customers are Non users of Digital Banking
Services. 41% of banking Customers had adopted Digital Banking, 19% are using
Digital Banking on low levels, and 22% of banking customers are high users of
Digital banking. (Bilal Ahmad Sheikh, 2017)

The survey study on the “Evolution status and prospects of internet banking in Nepal”
has found that only 18% surveyed consumers were satisfied with traditional banking
and 82% of the consumers were looking for more time saving and convenient banking
system and services. Long processing time and inconvenience of service delivery
were found to be important difficulties of traditional banking. Similarly, 93% of the
respondents in the survey were found to be using internet, 31% of them already suing
internet banking and 80% of the non-users of IB were found to have been showing
interest to use IB in the future. Therefore, from this statistics we can conclude that
there are lots of opportunities and bright future for internet banking in Nepal.
According to the findings of our study, influential driving factors for consumers

13
adopting towards IB were found to be convenience of banking through IB, time and
cost saving, fast processing, its global reach, anytime anywhere banking, self-serving,
compatibility and ease of use and customers perceiving it as sign of modernity. On the
other hand inhibiting factors were found to security and privacy of information over
the internet and lack of training to use it. Hence banks should be aware with the
driving factors of IB for consumers adopting IB to fulfill consumers demand and it
should be able provide secure IB services to win the belief of the consumers.
(Shrestha, 2013)

Financial Institutions are slowly moving from Brick and Mortar (Physical branches)
to click and Brick (E-banking). ATM's are the most popular electronic delivery
channel for banking services in Nepal. Only few customers are using internet banking
facilities. Nepalese financial institutions till date have not faced any kind of electronic
fraud or risk. Banks have basic security tools like firewall, lightening/power surge
protection. But it is found that the some banks are in lack of having regular back up of
website information and E-banking policy. Nepalese banks are using E-banking for
their own convenience and for the purpose of retaining exiting customers. The cost
analysis of most of the banks in Nepal is seems to be either inadequate or not applied
due to their narrow space of business transaction or lack of sufficient tools. No
significant correlation was found between use of E-banking and gender, marital status
or salary of customer. However, Use of E-banking signification association was found
with age and education. 

As per the blogs published by Esewa having title “Digital Banking and Payment
Trend in Nepal: Past, Present, and Future” state that Nepal have 9,92,724 internet
banking, customers, 1,06,70,072 mobile banking customers, 72,43,153 debit card
customers and 1,56,749 credit card customers.

1.5.3. Conceptual Framework

Debit card

Mobile banking Credit card

14
Digital banking
 Effectiveness Problems

Connect IPS Demat

Point of sale account

1.5.1.1 Mobile Banking

Mobile banking is a service provided by a bank or other financial institution that

allows its customers to conduct financial transactions remotely using a mobile
device such as a smartphone or tablet. Unlike the related internet banking it uses
software, usually called an app, provided by the financial institution for the purpose.

1.5.1.2 Debit Card

A debit card is a payment card that deducts money directly from a consumer’s
checking account when it is used. Also called “check cards” or "bank cards," they can
be used to buy goods or services; or to get cash from an automated teller machine or a
merchant who'll let you add an extra amount onto a purchase.

1.5.1.3 Credit Card

A credit card is a payment card issued to users (cardholders) to enable the cardholder

to pay a merchant for goods and services based on the cardholder's accrued debt (i.e.,
promise to the card issuer to pay them for the amounts plus the other agreed charges).
 The card issuer (usually a bank or credit union) creates a revolving account and
[1]

grants a line of credit to the cardholder, from which the cardholder can borrow money
for payment to a merchant or as a cash advance

1.5.1.4 Demat

A DEMAT account helps investors hold shares and securities in an electronic format.

This kind of account is also called a dematerialized account.

15
1.5.1.5 Point Of Sales

The point of sale or point of purchase is the time and place at which a retail
transaction is completed. At the point of sale, the merchant calculates the amount
owed by the customer, indicates that amount, may prepare an invoice for the
customer, and indicates the options for the customer to make payment.

1.5.1.6 Problems of Digital Banking

During COVID, the dependency on digital banking increased. Digital banking has
promoted technology-based account opening, digital lending, wealth and investing.
Banking is more accessible, and customer appetite for better technology is growing.
However, with the growing demand and digital banking pressure, banks are being
challenged to cope with the new customer behavior in various facets of digital
banking compliance. Problems of digital banking are:-

 Shift in Banking Habits and Products through Innovation.

 Security Concerns.

 Technical Issues.

 Lack of Personal Relationships.

 Growing Customer Expectations.

1.5.1.7 Effectiveness of Digital Banking

Digital banking is time efficient as it allows you to access most banking services from
the comfort of your home. You can save time on travel and convenience. Digital
banking is a great source for people who reside in remote areas where traditional
banks may be difficult to access. Convenience, user friendliness, 24/7 availability,
security, privacy, easy to use and real time response increase the effectiveness of the
digital banking.

1.5.4. Research Gap

Digital banking is part of the broader context for the move to online banking, where
banking services are delivered over the internet. Digital banking utilities is the global
issue. That play the huge role in success and failure of banking and financial intuition.
These days most of all bank and financial institution provides the various digital

16
banking utilities. Due to the rapid advancement in technology, the digital banking
utilities offered by the banks to their customers is increasing day by day.

Even though there are various research is conducted on banking and financial
institution, but are only few research are conducted on the topic of status of digital
banking utilities. There are not sufficient document about the status of digital banking
utilities available in the context of Nepal especially in Kushma, so that I am going to
conduct a research about the status of digital banking utilities with references of
Nepal bank, Kushma branch.

1.6 Research Methodology

Research methodology refers to the systematic, theoretical analysis of the methods

applied to a field of study. It comprises the theoretical analysis of the body of methods
and principles associated with a branch of knowledge. The way of conducting
research is known as research methodology. The methodology of the study is
descriptive in nature and makes use of secondary data. The secondary data is very
easy to collect and less time consuming.

1.6.1 Research Design

This refers to the overall strategy that a researcher adopts to study a research problem.
There are several types of research designs, including qualitative, quantitative, and
mixed-methods. I have used both qualitative as well as quantitative research design. A
research design that combines both qualitative and quantitative methods is referred to
as a "mixed methods" research design. In this type of research, the researcher collects
and analyzes data from both qualitative and quantitative sources to gain a
comprehensive understanding of the research problem. The descriptive research
design is used to describe the status of the digital banking services provided by the
Nepal Bank Limited and show effectiveness and problems of digital banking.

1.6.1.1 Research Site Selection

This research conducted on Kushma municipality, especially at Nepal bank limited

Kushma branch. I select the Kushma branch of Nepal bank for this research for the
convenience. Since Kushma is hometown which make easier for data collection and
brother is works in Nepal bank of Kushma bank which is another plus point for the
section of kushma branch for the research.

17
1.6.1.2 Sources of Data and Types

The data sources are used in this research are primary and secondary data sources.
Primary data are collected by making google forms. While collecting secondary data I
am visit bank office as well as the official website of bank to get the information
about the digital banking services offered by the Nepal bank limited. For collecting
the secondary data I collect data from following sources:-bank systems, internal
records, Annual publication of bank, Account opening form, Annual budget of banks,
Website of the bank

The data types used in this research are qualitative as well as quantitative data. The
quantitative data are collected for understanding the status of the digital bank of Nepal
Bank in kushma Branch. The qualitative data are collected through the primary data
collection sources through making google forms which helps to collect the data about
the effectiveness and problem of the digital banking Nepal bank.

1.6.1.3 Data Collection Methods

The data collection methods in this research is field visit and google forms. The
primary data are collected from google forms and secondary data are collected from
field visit. Bank was visited 2 times to collect the secondary data, Branch manager
was requested to provide data. Google forms are prepared to collect the secondary
data, google form is requested to filled by the digital banking user.35 participants are
involved in google form.

1.6.2. Data Analysis Tools And Techniques

In general, the process of cleaning, transforming, and modeling data to find out useful
information for business decision-making is commonly known as data analysis. There
are several tools used for data analysis to determine the status of a particular field,
some of the most commonly used ones are:

 Descriptive statistics: This includes measures such as mean, median, mode,

standard deviation, etc. to describe the characteristics of a dataset.
 Inferential statistics: This includes techniques such as hypothesis testing,
regression analysis, and correlation analysis to make inferences about a
population based on sample data.

18
  Data visualization tools: These include bar charts, line graphs, pie charts, etc.
to help visualizing patterns and trends in data.
 Machine learning algorithms: These include techniques such as decision trees,
random forests, k-nearest neighbors, etc. that allow for the creation of
predictive models based on data.
 Survey analysis tools: These include tools for conducting and analyzing
surveys to gather information and insights from a sample population.
 Text analysis tools: These include tools for analyzing and processing large
volumes of unstructured text data.

The choice of tool will depend on the type of data being analyzed and the research
question being asked. It is important to choose the appropriate tool to ensure
accurate and reliable results. IN this research I am using the data visualization
tools such as bar charts, line graphs, pie charts etc. and comparative study
methods.

1.7 Limitation of the Study

Digital Banking is the automation of traditional banking that enables customers to

access banking services using online and electronic platforms. Now days most of all
bank provide digital banking facilities around globe. In the context of Nepal, various
bank provide digital banking facilities. I will only consider the Nepal bank specially
Kushma branch for the status of digital banking. My research is only concerns with
the Nepal bank limited kushma branches for studying status of digital banking
utilities. The secondary data collected from the bank’s Pumari software which have
own limitation. The primary data collected from google forms, since google forms
only filled by the young, literate person so data may not be directly represent the
present scenario. There are various methods of conducting research about the
effectiveness and problems of digital banking, among them I conduct a research by
using customer survey methods. Similarly there are various tools for analyzing the
effectiveness and problems of digital banking, among them I have been used the data
visualization and descriptive analysis tools to analyze available data.

1.8 Organization of the Study

19
Summer Project report is typically made up of three main divisions: (1) Preliminary,
(2) body, (3) supplementary. Each of the sections contains different kind of contents.

Preliminary Materials Title page of the Summer Project Report, Student Declaration,
Certificate from the Supervisor, Acknowledgments, Table of Contents, List of Tables
and Figures Executive summary. Body of the Report Chapter I Introduction Chapter
II Data Presentation and Analysis Chapter III conclusion and Action Implications.

Supplementary Materials are References and Appendices.

20
 CHAPTER II

DATA PRESENTATION AND ANALYSIS

2.1 Profile of Nepal Bank Limited

Nepal Bank Limited (NBL), the first bank of Nepal proudly holds the glory of
marking the formal beginning of banking system in Nepal. Nepal Bank Limited was
established as first bank of Nepal on Kartik 30, 1994 (November 15, 1937 A.D.)
under Nepal Bank Act 1937. The bank was established with an authorized capital of
Rs.10 million, issued capital of Rs.2.5 million and paid up capital of Rs.0.842
million.. 

Notably, Nepal Bank Limited was inaugurated by King Tribhuvan with supportive
vision of Prime Minister Juddha Shumsher Jung Bahadur Rana to institutionalize
formal banking system in Nepal. Before the establishment of NBL, all monetary
transactions were carried out by private dealers and trading centers. It was the time
when there was no trust for such formal banking system. This reflected in under
subscription of shares (OnlyRs.0.842 million could be raised out of floated capital of
Rs.2.5 million). Raising deposit and mobilizing the collected deposit was even more
difficult. 

Absence of any bank in Nepal was hampering the economic progress of the country.
This was taken into consideration by Nepal Bank Limited with key focus on
overcoming such economic hamper and difficulties of general public. This was
initiated by providing banking services to people removing their inconvenience. This
objective got better and bigger with the time. Nepal Bank Limited has so far adopted
according to the technological changes, national economic welfare, and customer
preferences in services, market competition and global financial scenarios to become
a leading, glorious and highly reputed bank of Nepal.  

2.1.1 Corporate Vision

The corporate vision is “To be the most preferred bank of the Nation with complete
banking solutions”.
2.1.2 Mission Statement

Nepal Bank collaborates with its customers while designing, developing, and
delivering banking solutions to satisfy the interest of all stakeholders by efficiently
leveraging cutting-edge technology. The bank endeavors to be ethical in product
offering, responsive in operation, and trustworthy in ensuring security to protect its
own and customers' interests.

2.1.3 Value Statement

The followings are the core values (BREED) of the bank:

     B: Behave With Dignity and Respect     

     R: Responsible                                                       

     E: Ethical                                                                

     E: Empower Employees                                   

     D: Devote For Innovations                          

2.1.4 Goal

In line with the Vision and Mission Statements, the bank's goal is "To Achieve
secured and sustainable business growth to attain larger market share" through
enhancing Operational Efficiency and Customer Service, Increasing HR Productivity,
and Risk Management System.

2.1.5 Corporate Strategy 

Enhance Business Growth and Profitability

Efficient Human Resources Management and Organizational Effectiveness

Technology-driven transformation and digital customer engagement66

Improve Operational Efficiency and Customer Service

Ensure Effective Control, Compliance, and Risk Management

Ensure Effective Assets Management.

2.2 Data Presentation and Analysis

22
2.2.1 Status Of Digital Banking

Digital 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 digital
banking has been gradual and remains ongoing, and is constituted by differing
degrees of banking service digitization. Digital 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.

Various banks provide various types of digital facilities. Nepal Bank Limited also
provide the digital banking facilities. This study only focuses on the status of digital
banking utilities provided by the bank .Digital Banking is the automation of
traditional banking that enables customers to access banking services using online and
electronic platforms. There are various digital banking services which is offered by
the Nepal bank, those services are:-

 E-Banking (Internet Banking)

 Mobile Banking
 Plastic Cards
 Automated Teller Machine (ATM) and Point of Sale (POS) Machine

2.2.1.1 Number Of Customers Or Account

Nepal bank limited have the 19, 14,812 customers at end of fiscal year 2077/78.
Among them 3,63,342 are current accounts, 15,14,937 are saving account, 29976 are
fixed deposit account, 420 are call accounts and 6,137 are margin account. At the end
of chitra 2078, Nepal bank have a 3,83,711 current accounts, 16,60,238 Saving
Account 41,034 fixed deposit accounts, 515 call accounts and 7,979 margin account.

Table 2-1:
Number of Accounts of Nepal Bank Limited

Particulars 2078 ashadh end 2078chitra end

Current account 3,63,342 3,83,711
Saving account 15,14,937 16,60,238

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 Fixed deposit 29,976 41,034
Call account 420 515
Margin account 6,137 7,979
Others account
Total 19,14,812 20,93,477

(Source: budget of the Nepal Bank Limited, Kushma Branch)

Table no 1 Number of Accounts of Nepal Bank Limited shows there is increased in

all types of accounts during the period of Ashadh to Chitra in 2078. The number of
saving account is reached 15, 14,937 to 16, 60,238 raised by 1, 45,301 which is 9.6%
increment in saving account during Ashadh to Chitra in 2078. Current accounts in
increased 3, 63,342 to 3, and 83,711 by 20,369 accounts which is 5.60% growth
during Ashadh to Chitra in 2078. Similarly fixed accounts increased 29,976 to 41,034;
call accounts increased 420 to 515, margin account increased from 6,137 to 7,979
during Ashadh to Chitra in 2078.

Table 2-2:
Numbers of account in kushma Branch

Deposit account 2077 Ashadh 2077 Chitra 2079/10/20

Current 5,979 6,204 7175
Saving 12,225 13,132 15273
Fixed 662 1081 933
Call 2 3 1
Margin and other 3 5 14
Total 18,871 20,435 23396

(Source: budget of the bank and internal bank system)

Table no 2 shows the number of account during three points of time which is
increased along with the time. Total account is 18,871 in 2077 aashadh, 20,435 in
2077 chitra end and 23,396 in 2079 magh. Number of current account is 5,979; 6,204
and 7,175 at 2077 Ashadh, 2077 Chitra and 2079 Magh. Number of saving account
are 12,225; 13,132; 15,273 at 2077 Ashadh, 2077 Chitra and 2079 Magh. Number of

24
call account are 2; 3 and 1 at 2077 Ashadh, 2077 Chitra and 2079 Magh respectively.
Number of margin and other account are 3; 5 and 14 at 2077 Ashadh, 2077 Chitra and
2079 Magh respectively.

The table no 3 is about digital Banking of Nepal Bank Kushma Branch, which shows
the numbers of mobile banking, debit cards, credit cards, e-banking and others digital
banking users during three points of time. As per the table and figure there was the
4,500 mobile banking users, 1,090 no of ATM card users and 7 e-banking users at the
end of Aashadh 2077. At the end of Chitra 2077 the number of customer using mobile
banking, debit card and e-banking increased and reached to the 6,763; 1,324 and 11
respectively.

Table 2-3:
Digital Banking User of Kushma Branch

s.n. Types 2077 Ashadh 2077 Chitra 2079

magh,20
1 No of mobile banking 4500 6763 7162
2 No of e banking 7 11 60
3 No of debit card 1090 1324 9390
4 No of credit card 12
5 No of QR 1
6 DMAT 697
7 Connect IPS 187

(Source: budget of the bank and internal bank system)

According to the present data the Nepal bank Kushma branch have 7,162 mobile
banking users, 9,390 debit card users, 60 e-banking users, 12 credit card users, 1 Point
of sale user and 697 DEMAT account users.

2.2.2 Effectiveness Of Digital Banking

Digital banking refers to the use of technology, such as mobile apps and online
banking portals, to access banking services and manage financial transactions. The
effectiveness of digital banking can be evaluated in several ways:

25
  Convenience: Digital banking offers customers the ability to access their
accounts and perform transactions anytime, anywhere, providing a high level
of convenience.
 Efficiency: Digital banking reduces the need for physical interactions with
bank branches and ATM machines, improving the speed and efficiency of
banking transactions.
 Increased Accessibility: Digital banking enables financial services to be
delivered to a wider customer base, including those who may not have access
to traditional banking channels.
 Improved Customer Experience: Digital banking allows for personalized and
seamless experiences, with features such as account aggregation, real-time
notifications, and budgeting tools.
 Enhanced Security: Digital banking typically utilizes robust security measures,
such as multi-factor authentication and encryption, to protect customer data
and transactions.
 Increased Competitive Advantage: By offering digital banking services, banks
can improve their competitive advantage and attract new customers while
retaining existing ones.

Overall, digital banking provides a more convenient, efficient, and secure way for
customers to access and manage their financial services, leading to improved
customer satisfaction and increased business success.

Tools Used for Measuring Effectiveness of Digital Banking

Customer Satisfaction Surveys: Measuring customer satisfaction through surveys

provides insights into the overall customer experience, including the ease of use of the
digital banking platform and the effectiveness of customer service.

 User Engagement Metrics: Analyzing user engagement metrics such as the

number of logins, frequency of transactions, and usage of specific features
provides insights into how customers are using digital banking services.
 Conversion Rates: Measuring conversion rates for specific actions, such as
account openings or loan applications, provides insights into how effective
digital banking is at driving desired customer outcomes.

26
  Net Promoter Score (NPS): The NPS is a measure of customer loyalty and
satisfaction, and can be used to assess the effectiveness of digital banking
services.
 Financial Metrics: Financial metrics such as revenue, profitability, and return
on investment provide a quantitative measure of the success of digital banking
initiatives.
 A/B Testing: A/B testing allows you to compare the performance of two
different versions of a digital banking feature or platform, providing insights
into what works best for customers.

In this research I have conducted the Customer Satisfaction Surveys which Measure
customer satisfaction through surveys provides insights into the overall customer
experience, including the ease of use of the digital banking platform and the
effectiveness of customer service.

In this research 35 men was participate through the google form, among which 22
(62.9%) are female, and 13(37.1%) are female. All (100%) those participant are fall in
18 to 25 years group and all(100%)participate are using the digital banking services.
30 (85.7%)participant have bachelor academic qualification and 5(14.3%) participant
have 12 class academic qualification.

I have several tools to measure the effectiveness of the digital banking.

 Easy to use: it is an important parameters that help to know the effectiveness

of the digital banking. In the survey the 14 people are strongly agree on that
the digital banking are easy to use and 20 agree on this statement and 1 people
is neutral. In this survey about 97 % people are favored, and the data shows
that the digital banking are effective in terms of easy to use. According to easy
to use parameter digital banking is effective.
 Security: 23 participants agree on digital banking are secure but remaining the
9 participants and 3 are disagree are on the side of digital banking is not
secure. It mean 66 % people perceive the digital banking as a secure 25% are
neutral and 9 % presumes digital banking is not secure that mean it’s poses
threats to the user. According to security parameter digital banking is
effective.

27
 Reliable:-among the 35 participants 26(74%) participants perceive digital
banking as reliable, 7(20%) participants are neutral and 2 (6%) is opposed to
reliability of the digital banking. According to reliable parameter digital
banking is effective.
 Save time :- the 33(94% participants agree on digital banking save time and
one(3%) participant remain neutral and another one(3%) participant disagree
on the statement on digital bank save time. According to save time parameter
digital banking is effective.
 Convenience: - on the basis of parameter of the convenience, digital banking
is effective. In research 31(88.57%) participants’ are digital banking are
convenience and 3(8.57%) remain neutral and 1(2.85%) participants is oppose
on digital banking is convenience. According to convenience parameter digital
banking is effective.
 24/7 availability: - Among 35 participates 32 participants agree on the
statement of the digital banking services are 24/7 available but 3 participants
remain neutral. According to 24/7 available parameter digital banking is
effective.
 Cost effective: - cost effective is another important parameter which measures
the effectives of the digital banking services provided by the bank. In the
survey research on which 35 participants take participate and 21 people are
argue on the statement that digital banking is cost effective but one participant
remain neutral and 13 participants disagree in this statement. Since more
participants are agree on the statements so we conclude that the digital
banking is cost effective.
 Accept personalization:- In the survey research on which 35 participants take
participate and 25 people are argue on the statement that digital banking
accept personalization but 9 participant remain neutral and 1 participants
disagree in this statement. Since more participants are agree on the statements
so we conclude that the digital banking accept personalization, which increase
the effectiveness of the digital banking.
 Availability :- In the survey research on which 35 participants take participate
and 30 people are argue on the statement that digital banking are available in

28
 their location but 5 participant remain neutral. Since more participants are
agree on the statements so we conclude that the digital banking are available,
which increase the effectiveness of the digital banking.
 Complaints facing and solving problems :- In the survey research on which
35 participants take participate and 23 people are argue on the statement that
digital banking complaints are face by the bank and they are solve such a
problems but 9 participant remain neutral and 12 participants disagree in this
statement.. Since more participants are agree on the statements so we conclude
that the digital banking are available, which increase the effectiveness of the
digital banking.

In table 4 “effectiveness of the digital banking” show the result of the servey
regarding the effectiveness of the banking services. On which 278 points are in
favoured on the side of digital bank is effective,and 58 points are remain neutral
and 15 points are in opposed to digital bank is effective. From the survey data
79.43 % are agree thaat the digital banking is effective and 16.57 % remain
neutral and 4.29% agree that the digital banking is not effective. The digital
banking is esy to use(34 participants in favoured ) is most effective and highest
paramerter but securitey, cost and complents facing and problems sloving is low
effective parameter having 3 disagrement on each paramrters while measuring
the effectiveness of the digital banking.

Table 2- 4:
Effectiveness of the digital banking

s.n Parameters EFFECTIVE neutral NON EFFECTIVE

. S.A. A. T.A. D. S.D. T.D.
1 Easy to use 14 20 34 1 0 0 0
2 Secure 8 15 23 9 3 3
3 Reliable 7 19 26 7 1 1 2
4 Save time 21 12 33 1 1 1
5 Convenience 11 20 31 3 1 0 1
6 24/7 available 14 18 32 3 0 0 0
7 Cost effective 7 14 21 11 3 0 3

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8 Accept 7 18 25 9 1 0 1
personalization
9 Availability 13 17 30 5 0 0 0
10. Compliant facing 9 14 23 9 3 0 3
and solving
problems
TOTAL 111 167 278 58 1 14 15

(Source: questionnaire/ Likert Scale through google forms)

2.2.3. Problems Of Digital Banking

The problems of digital banking refer to the various challenges and difficulties that
can arise when using digital banking services. These can include security concerns
such as the risk of fraud and cyber-attacks, technical glitches that lead to service
disruptions or data loss, limited services compared to traditional banking methods,
difficulties in navigating the user experience, limited accessibility for some
individuals, dependence on technology and the internet, and privacy issues related to
the storage and processing of sensitive personal and financial information. These
problems can lead to inconvenience, frustration, and a lack of confidence in digital
banking services, making it important for banks and financial institutions to address
these issues and implement measures to ensure the security, reliability, and
accessibility of their digital banking systems.

Digital banking has become a popular alternative to traditional banking methods, but
it also comes with its own set of challenges and problems. Some of the most
significant issues include:

Security concerns: One of the biggest concerns with digital banking is the risk of
fraud and cyber-attacks. This can include hacking, identity theft, and other types of
financial crimes. Digital banking systems may also be vulnerable to viruses, malware,
and other forms of cyberattacks. To mitigate these risks, it is essential to have robust
security measures in place, such as encryption, multi-factor authentication, and secure
data storage.

30
Technical glitches: Digital banking systems can sometimes experience technical
problems that lead to service disruptions or data loss. This can be due to server issues,
network outages, or software bugs. To minimize the impact of these problems, it is
crucial to have robust backup systems and disaster recovery plans in place.

Limited services: Some digital banking platforms may not offer all of the services
that are available through traditional banks, such as the ability to deposit checks or
access to loan services. This can be a significant inconvenience for users who require
these services and may result in them having to use multiple banking platforms to
meet their needs.

User experience: The design and user experience of some digital banking platforms
can be difficult to navigate, leading to confusion and frustration among users. This
can result in users not fully utilizing the available features and benefits of digital
banking. To improve the user experience, it is essential to have a well-designed and
intuitive platform that is easy to use.

Limited accessibility: Some users may not have access to the technology or internet
connectivity required to use digital banking services. This can include those who live
in rural areas with limited broadband access, those who are elderly or have
disabilities, and those who cannot afford the necessary technology. To address this
issue, it is essential to ensure that digital banking services are accessible to everyone,
regardless of their technological or financial resources.

Dependence on technology: Digital banking relies heavily on technology and the

internet, making it vulnerable to power outages and other technological failures. This
can result in users being unable to access their accounts or complete transactions
during these periods, causing inconvenience and frustration.

Privacy issues: Digital banking can sometimes raise privacy concerns, as sensitive
personal and financial information is stored and processed electronically. This
information can be vulnerable to breaches or unauthorized access, which can result in
identity theft and other types of financial crimes. To address these privacy concerns, it
is essential to have robust security measures in place, such as encryption and secure
data storage, and to ensure that user information is not shared or sold without their
consent.

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Among those various problems of the digital banking services I am considering the
some of the problems while conducting survey research, those parameters are :-

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 Table 2- 5:
Problem of the Digital Banking

S.N. PARAMETERS Agree (Main Disagree(Miner

problem) problems )
S.A A T N D. SD. T
1 availability 1 10 11 7 12 5 17
2 Security 3 2 5 14 13 3 16
3 Technical issues 4 12 16 14 4 1 5
4 Hacking 3 15 18 13 4 0 4
5 Delay in response 1 7 8 18 8 1 9
6 Burden to 1 4 5 11 17 2 19
customers
7 Transfer limit 4 15 19 11 4 1 5
total 17 65 82 88 62 13 75

(Source: questionnaire/ Likert Scale through google forms)

 Availability:- In the survey conducted among 35 participants 11 people take a

availability as a problems of the digital banking and the 7 participants are
remain neutral but for 17 participants are opposed to the availability as the
problems. Since no of people who agree availability as the problem are less
than the people who disagree availability as the problems so the availability is
the minor problems.
 Security: - In the survey conducted among 35 participants 5 people take a
security as a problems of the digital banking and the 14 participants are remain
neutral but for 16 participants are opposed to the Security as the problems.
Since no of people who agree Security as the problem are less than the
people who disagree security as the problems so the Security is the minor
problems.
 Technical issues :- In the survey conducted among 35 participants 16 people
take a Technical issues as a problems of the digital banking and the 14
participants are remain neutral but for 5 participants are opposed to the

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 Technical issues as the problems. Since no of people who agree Technical
issues as the problem are more than people who disagree Technical issues as
the problems so the Technical issues is the major problems.
 Hacking: - In the survey conducted among 35 participants 18 people take a
hacking as a problems of the digital banking and the 14 participants are remain
neutral but for 4 participants are opposed to the hacking as the problems. Since
no of people who agree hacking as the problem are more than people who
disagree hacking as the problems so the hacking is the major problems.
 Delay in Response :- In the survey conducted among 35 participants 8 people
take a as delay in response a problems of the digital banking and the 18
participants are remain neutral but for 9 participants are opposed to the delay
in response as the problems. Since no of people who agree delay in response
as the problem are less than people who disagree delay in response as the
problems so the hacking is the minor problems.
 Burden to customers:- In the survey conducted among 35 participants 5 people
take a Burden to customers as a problems of the digital banking and the 11
participants are remain neutral but for 19 participants are opposed to the
Burden to customers as the problems. Since no of people who agree Burden to
customers as the problem are less than people who disagree Burden to
customers as the problems so the hacking is the minor problems.
 Transfer limit:- In the survey conducted among 35 participants 19 people take
a Transfer limit as a problems of the digital banking and the 11 participants are
remain neutral but for 5 participants are opposed to the Transfer limit as the
problems. Since no of people who agree Transfer limit as the problem are
more than people who disagree Transfer limit as the problems so the Transfer
limit is the major problems.

2.3 Finding and Discussion

The current status of digital banking of the Nepal banks of Kushma branch shows that
the ATM card user of the bank are more than mobile banking user of the bank.. ATM
usage is the most popular digital banking channel, with 9,390 users. Mobile banking
is the second most popular channel, with 7,162 users. The usage of other digital
banking channels such as credit cards, e-banking, and Connect-IPS is relatively low,

34
with 12, 60, and 187 users, respectively. DEMAT usage is also low, with 697 users.
These findings suggest that ATM usage is the most common form of digital banking,
followed by mobile banking. The usage of other digital banking channels is relatively
low compared to these two channels. Further research and analysis would be needed
to understand the factors that influence the usage of different digital banking channels
and to gain a more comprehensive understanding of the digital banking landscape.

The finding of the survey which is conducted to measure the effectiveness of the
digital banking is that the digital banking is effective in terms of easy to use, security,
reliability, saving time, convenience, availability, cost effective, personalization and
complaints facing and problems solving. On which 278 points are in favoured on the
side of digital bank is effective,and 58 points are remain neutral and 15 points are in
opposed to digital bank is effective. From the survey data 79.43 % are agree thaat the
digital banking is effective and 16.57 % remain neutral and 4.29% agree that the
digital banking is not effective. The digital banking is esy to use(34 participants in
favoured ) is most effective and highest paramerter but securitey, cost and complents
facing and problems sloving is low effective parameter having 3 disagrement on each
paramrters while measuring the effectiveness of the digital banking.According to
finding of the survey availability, security, delay in response, burden to customer are
minor problems whereas technical issues, hacking and the transfer limit is the major
problems.

There are several parameters are used to measure the effectiveness and problems of
the digital banking. Easy to use, security, Reliable, Saving time, Convenience, 24/7
availability, Cost effective, Accept personalization, Availability, Compliant facing
and solving problem are the several parameter which are used to measure the
effectiveness of digital banking. Similarly Availability, Security, Technical issues,
Hacking, Delay in response, Burden to customers and Transfer limit are the
parameters to measure the problems of the digital banking. Those parameter are based
on the Technology acceptance theory (TAM) and Trust theory. Technology
Acceptance Model (TAM) (Davis, 1989) state that an individual's intention to use
technology is determined by their perception of its usefulness and ease of use. The
theory has been widely used to explain and predict the adoption and usage of digital
banking services. Trust Theory (Mayer et al., 1995) theory state that trust is a critical

35
factor in the adoption and use of digital banking services. Trust in digital banking
services is influenced by factors such as security, privacy, and reliability.

36
 CHAPTER III

CONCLUSION AND ACTION IMPLICATION

3.1 Conclusion

This research is conducted with the aim of evaluate the status of digital banking
services of Nepal bank limited and effectiveness of digital bank along with the
problems. The data are collected through the secondary as well as primary sources.
Data related the status of digital banking is collected with the help of bank internal
system, whereas data related effectiveness and problems of digital banking is
collected through the questionnaire. The study was conducted on 35 participants
among which 22 are female and 13 are male participants.

The finding of the research is digital banking is effective to the customer. The finding
of the survey which is conducted to measure the effectiveness of the digital banking is
that the digital banking is effective in terms of easy to use, security, reliability, saving
time, convenience, availability, cost effective, personalization and complaints facing
and problems solving. On which 278 points are in favoured on the side of digital bank
is effective,and 58 points are remain neutral and 15 points are in opposed to digital
bank is effective. From the survey data 79.43 % are agree that the digital banking is
effective and 16.57 % remain neutral and 4.29% agree that the digital banking is not
effective.Another findig of this survey is availability, security, delay in response and
burden to customer are minor problems whereas technical issues, hacking and the
transfer limit is the major problems.

3.2 Action Implication

There are various factors this impacts on status, effectiveness and problems of the
digital banking services. The status of digital banking is improving along with
increase with accessibility of the internet and digital electronic devices. The bank
must aware the public about the advantages and ways of using digital services, which
will increase digital banking services. There are the various parameter which impacts
on effectiveness and problems of digital banking. For measure the effectiveness of the
digital banking is that the digital banking is effective in terms of easy to use, security,
reliability, saving time, convenience, availability, cost effective, personalization and
complaints facing and problems solving. Low Security, high price of digital banking
services, low complaints facing and problems solving and low reliability are the
hindering factors of effectiveness of the digital banking services. So I recommend the
bank for the improve security, improved reliability, reduce the price for digital
banking services, and handle the complaints in time and solve the problems in time
for improving the effectiveness of the digital banking services of the banks.

The problems of the banks can be measure using several tools. Lack of availability,
low security, various technical issues in digital banking, hacking, delay in response,
increasing cost burden to customers, transfer limits are the several tools that depicts
the problems of the digital banking services . According to finding of the survey
availability, security, delay in response, burden to customer are minor problems
whereas technical issues, hacking and the transfer limit is the major problems. The
bank should concerns with the major as well as minor problems of the digital banking.
The bank must improve security, increase transfer limit, reduces technical issues,
server down issues for minimizing the problems of digital banking. Bank should also
concerns with the increasing availability and reduce response time for minimizing the
digital banking problems.

38
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 APPENDIX

“Digital : Status, Effectiveness and Challenges ”

This research is entitled “Digital : status, effectiveness and challenges ” undertaking

as the partial fulfillment of the requirement for the bachelor's degree in Bachelor of
Business Administration(BBA) Tribhuvan University. The major objective of the
study is to analyze effectiveness and problem of digital banking to the perception of
consumers of digital banking of Nepal Bank . It is humbly request to all the
respondents to fill up the questionnaire. Please be confident all your responses will be
kept confidential and feel free to answer the given questions according to your
understanding.

Your participation in the study will be highly appreciated.

Govinda Prasad Bastola

Dhawalagiri Multiple Campus

Tribhuvan University

1. what is your name?

................................
2. please mention your gender ? 
o male
o female
3. please mention age category.
o 18-25
o 26-30
o 31-40
o 40 above
4. what is your academic qualification
o below 12

41
 o +2
o bachelor's
o master's or above
5. do you use digital banking ?
o yes
o no
6. which digital banking services do you used?
o mobile banking
o debit card/ atm card
o credit card
o dmat
o connect ips
o POS services
7. effectiveness of digital banking of nepal bank 

particulars Strongly Agree Neither Disagree Strongly

Agree agree Disagree
nor
disagre
e
Digital baking services o o o o o
are easy to use ?
Digital banking are o o o o 8.
secure ?
Digital banking are o o o o o
reliabile ?
Digital banking services o o o o o
save the time ?
Digital banking is o o o o o
convenience to user ?
Digital banking services o o o o o
are 24/7 available
Digital banking services o o o o o
are cost effective ?
Digital banking services o o o o o
accepts the
personalization ?
Digital banking are o o o o o
available in your
location ?
the bank handles the o o o o o

42
complains regarding
digital banking and
sloves problems quickly ?

9. The Problems of digital banking of the bank are:

Particulars Strongly Agree Neither Disagree Strongly

Agree agree nor Disagree
disagree
Digital banking are not o o o o o
available 24/7
digial banking services o o o o o
are not secure
digital banking services o o o o o
have various techinical
issues 3
digital banking increase o o o o o
the risk associated with
hacking and money
theft ?
digital banking is not o o o o o
work in real time ( just in
second)
digital banking increase o o o o
the burden to the
customer?
digital banking facilities o o o o o
allows only limited
amount of money for
transfer ?

THANK YOU FOR GIVING YOUR VALUABLE TIME!

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