Proliferation of Digital Banking in Nepal, cyber threats and way forward to manage

1. Proliferation of Digital Banking
Bhola Nepal

2. Digitization
• Digitization is no more a choice. Today every
business sector is experiencing digital
transformation and BFIs are the forefront.
• As Bill Gates said in 2008, banking is essential,
banks are not.
• Information and communication technology
(ICT) has changed the way banking is done
worldwide,
• Digital banking helps banks achieve operational
excellence and customer delight
• The collapse of Kodak, Blockbuster, Nokia etc.
• Today’s scenario “ Digitize or Die”

3. Digitization
• Online banking in Nepal primarily comprises of facilitating various
banking activities using electronic channels, such as
– Automatic Teller Machines (ATMs),
– Point of Sales (POS) systems,
– SWIFT transfers, and
– last but not least telephone, mobile and internet banking services.
• Retail transactions in Nepal also use digital banking payment
methods in the forms of:
– cards,
– QR payments,
– e-wallets,
– internet banking,
– mobile banking,
– POS machines and
– Point of Transaction (POT) machines.

4. Digital Banking Milestone

5. Proliferation of Digital Banking
Source: NRB as of Kartik end 2080
No. of Bank Accounts 52,901,031 BFIs Participants 54
No of Internet Banking 1,759,193 Commercial Banks 20
No of Mobile Banking 22,505,083 Development Banks 17
No of Digital Wallets Finance Companies 17
No of Cards Issued 13,133,569 Non Bank Participants 37
Debit Cards 12,673,560 PSO 10
Credit Cards 301,236 PSP 27
Prepaid Cards 158,773
No of ATMs 5,059

6. ADBL Covers
Mobile Banking 2.87%
Internet Banking 0.87%
Debit Cards 1.62%
Credit Cards 0.37%
Prepaid Cards 0.09%
No. of ATMs 2.55

7. Enablers of Digital Banking
• The availability of smartphones at cheaper rates.
• The growth of broadband Internet penetration. (Projected
Internet Access Population 80%, as per 15th plan)
• The provision of anytime, anywhere banking services.
• Cost-effective, faster, and easier access to banking services.
• Government policy (Digital Nepal Framework 2019, with the
main objective of digitally empowered economy)
• NRB Policies
– Separate Department PSD; For regulate and supervise payments
– Provided license to non bank participants (PSOs & PSPs)
• Green Economy (Program and Budget 2080/81, ESRM Guideline)
• Faster, easier, convenient and more efficient.
• Increased globalisation and competition worldwide resulting in
higher demands for Nepali banks to adapt ICT.
• Growth During Pandemic. (Banks discouraged customer from
visiting bank branches)

8. Benefits of using e- Banking
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;Sg] .
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lbO{ /xg gkg]{ .

9. Benefits of using e- Banking
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.
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10. Threats ahead….
• Infrastructure costs.
• Human resource problem
• Hacking, Fishing, cloning etc.
• Internet connectivity costs
• Difficult user interface
• Lack of awareness amongst customer
• Limitation of functionality
• Security concern
• Organizational changes
• Technology overload
• Small number of choice.
• Regulatory issues
• Outsourcing problems
• Trust issues
• Ethical issues
• Loss of personal relationship

11. Way Forward
In order to combat above mentioned threats and cyber attacks bank
will have consider the following points
• Follow the best practice and recommendation
– GDPR (The EU General Data protection regulation) the strongest
privacy and security law in the world
– PCIDSS (Payment card industry data security standard)
– EMV (Technical standard for Smart payments cards)
– OWAPS (open web application security project: Helping website
owners & security experts protect web applications from cyber
attacks)
• Incident response plan
– Cyber attacks: Cyber Security incident response plan
– DRP (Disaster recovery plan), BCP (Business Continuity plan)
• Independent Testing assessment
– Comprehensive security testing approach VAPT (Vulnerability
assessment and penetration testing)
– Annual IS Audit

12. Way Forward
• Cyber Governance
– Information Security officer (ISO/CISO) with proper authority
– Provided Direct reporting access to BOD
– Identification: Identify business process and information assets.
– ICT guidelines
– Response and recovery
• Employee awareness
– Provide training and awareness programs.
• Information sharing Network
– Programs of digital financial literacy and education
– Establish information sharing networks for employees and
banking community.

13. Thank you