Reported by: banking|Updated: October 1, 2020
The bank has accelerated its digital transformation with new products, new technologies and sops for attracting customers
Anil Keshary Shah, CEO, Nabil Bank
The covid pandemic has brought with it unprecedented challenges for governments across the globe. From tackling the medical aspects of the infection and controlling its spread, governments have to address the issues relating to the economic impact, which is double jeopardy. With no clarity on how soon or how late the pandemic is likely to be brought under control, varying economic scenarios from global think tanks and experts all agree on the possibility of a long drawn global recession of varying magnitudes for each country.
Assisting nations to minimize the economic hardships as a result of the pandemic and chalking out a way forward, the World Economic Forum (WEF) on its part has been proactively sharing various policy recommendations. Since each country has its own dynamics and financial outlooks, some of these recommendations may be more suitable than others. Taking a cue from the WEF suggestions, countries like Nepal for example have recently unveiled their new monetary policies for FY 2020-21 with a focused approach on mitigating economic effects of the pandemic.
BANKING SECTOR DEVELOPMENT
What remains a challenge for many nations and small economies like Nepal is to bridge the gap between WEF’s recommendations and the slow pace of development in the banking sector. As a case in point, WEF has suggested that policy makers must ensure their financial systems are capable of safely meeting the public’s need for financial services through digital channels. Now this may be a given thing in developed and emerging economies like India but smaller economies may find it hard to suddenly scale up the level of digital transformation in their financial sector.
The challenges may be complex and varied but smart financial enterprises and banks are proactively assessing the situation, trying to flatten the curve, stay afloat and eventually revive in the medium to long term. Smaller economies may in fact show the way forward with their faster pace of assessment of the situation on ground while concurrently assessing how new introduced measures may be bringing in the required support for the banking and financial sector at large.
IMPACT ON SMALLER ECONOMIES
So, while smaller economies may actually bounce back faster than bigger ones, the impact of covid has been much more severe for them. Anil Keshary Shah, CEO of Nabil Bank, Nepal’s leading private sector bank with 118 branches and 178 ATMs reveals how banking operations in Nepal had contingency plans in place for business disruptions owing to emergencies like political unrest, calamities or terrorist attacks but never imagined a human resource problem. With data centers, backups, security everything in place all of a sudden people or the lack of it owing to lockdown made operations a huge challenge for banks.
Starting operations without putting the team at risk was a novel challenge which many like Shah had to immediately figure out. The distancing of critical teams was one of the first contingency plans put in place since little was known about the virus while ample security measures in place also meant that Nepal’s banking sector did not have even a single day off as the pandemic stuck.
With a lockdown in place, imagine a scenario where the financial sector would go down. This operationalization of banking with limited staff and security protocols also helped calm the average man on the safety of his or her savings and of any liquidity needs shares, according to Shah.
IMPROVING CUSTOMER CONFIDENCE
As part of the immediate plans, Shah believes improving customer confidence is the key. With all experts suggesting recession and possibility of bad loans, customer confidence should be maintained to allow for ample incoming banking deposits. Delivering day to day services like regular banking operations helps maintain that customer confidence believes Shah with his experience with Nabil Bank.
SURVIVAL AND STABILITY
Considering the Nepal’s banking sector with a large majority of income being linked to sectors like tourism and incoming foreign remissions, Shah shared how Nabil Bank is now focusing on stability over profits for the time being. Survival, revival and growth are his 3-point mantra as Nabil Bank continues to offer services to consumers maintaining financial confidence and stability.
Bad loans are a very common buzz world in the financial and banking circles today. Virtually all banks are in some way or the other bracing for increased number of NPAs. Nabil Bank on its part has classified its loans intro 3 distinct categories – red, amber and green – depending on their risk profiles to make it easy for them as well as the borrowers.
Digital transaction has gained traction in Nepal’s banks with people preferring digital banking over physical operations. Thankfully, banks like Nabil Bank had put in place accelerated digital transformation even when digital channels were seldom used or were less popular with the average consumer. A digital corporate banking product is what gained popularity in a post-covid scenario, shares Shah. Likewise, Nabil Bank also offers a Gen N account for the youth who were earlier not involved in mainstream banking owing to popularity of cash economy. This new generation account with digital services is attracting young consumers with sops like free data. What covid has done well for Nepal, says Shah, is to balance the supply and demand for digital banking products. Another case in point is introduction of Nabil Digi Bank, which takes care of all digital needs of a consumer taking digital to the bottom of the pyramid.
While economies like India have a vibrant digital ecosystem in banking and financial sector, things are not the same in countries like Nepal. Thankfully, increasing mobile phone penetration with good network connectivity makes the last mile consumer ready for digital, believes Shah, explaining his experience with various digital products being offered by Nabil Bank. With ample access to technology, majority of population under the age of 25, digital is the way forward and is likely to witness a massive boom in the future, says he.
NABIL BANK GOIND DIGITAL
Sometimes transformation can be brought up in unforeseen circumstances as witnessed during the covid crisis. Nabil Digi Bank is what Shah describes as one of the recent digital transformations in a post covid world. Digi Bank has been built with a vision to make digital the next growth engine for Nabil Bank, explains Shah, stressing on how the bank is at the forefront of a digital revolution in banking. So, while the long-term vision is to replace Nabil Bank as a physical entity with the Nabil Digi Bank, the bank is offering digital slowly to ensure that customers embrace the products, says Shah. For example, using QR code-based banking is what is helping the bank channel the bottom pyramid or last mile consumers to go digital with ease and no added expense at their end. Sops and offerings to make digital products worthwhile are of the plan to increase popularity of these products. Being user friendly, safe and secure, offering an added incentive for consumers to go digital is the core mantra, explains Shah on the growth of Digi Bank thus far. Digital also rules out the need for banks to open branches in difficult terrains and collaborating with institutions like women cooperatives help it to create financial literacy, emphasizes Shah detailing how digital is opening up a massive transformation window.
FUTURE OF DIGITAL
With the huge informal cash based Nepalese economy suddenly adopting digital means tha covid has opened up Nepal’s banking sector. Shah with his experience with Nabil Bank having tracked the cash economy and post-covid scenario, believes that formalizing an informal economy is possible by digitization. Bringing informal economy into the formal economy is the next big challenge, he says as he foresees a massive future for digital financial services in accomplishing this massive shift. With covid making people rely on digital more than ever before, Shah is optimistic that the digital revolution will place Nepalese banking sector at the cusp of a massive boom in the years ahead.
A booming banking sector is linked directly to a booming economy. Nepal with its rich source of hydro power generation is likely to draw massive investments from neighboring countries. This along with focus on tourism and agricultural related product derivates like herbs and medicine make Nepal’s economy healthy in the medium to long term outlook.