Adaption of E-Banking and its effects during Covid-19

A study of Commercial Banks in Nepal

Jason Rai
Apex College
Exam Roll No: 18220020

A Graduate Research Proposal submitted to

Apex College
Pokhhara University

Submitted in the partial fulfillment for the degree of

Masters of Business Administration (MBA)

Kathmandu
February, 2021
Introduction

Technology is the sum of techniques, skills, methods, and processes used in the production
of goods or services or in the accomplishment of objectives. An example of technology is the
internet which has made up-to-date information available to anyone with access in a matter of
moments and provides real time information about events around the world. The role and impact
of technology in both our personal and working lives is ever growing. Understanding how people
shape technology and how technology shapes people's interactions with each other and the
natural world is important not only for those who research, develop and implement new
technologies but also for all those people and organizations that have to use those technologies in
their working and personal lives. Internet has made this world a global village and has
revolutionized the different industries. The growth in IT sector has changed the way individual
and organization interacts with the external environment. The advancement in IT sector has also
seen tremendous growth in the services sector in the recent past. One such industry highly
touched by the never ending innovations in the IT sector is the banking industry. Technology has
continuously played on important role in the working of banking institutions and the services
provided by them. Information Technology enables sophisticated product development, better
market infrastructure, implementation of reliable techniques for control of risks and helps the
financial intermediaries to reach geographically distant and diversified markets. Internet has
significantly influenced delivery channels of the banks. Internet has emerged as an important
medium for delivery of banking products and services. Banking environment has become highly
competitive today. To be able to survive and grow in the changing market environment banks are
going for the latest technologies, which is being perceived as an 'enabling resource' that can help
in developing learner and more flexible structure that can respond quickly to the dynamics of a
fast changing market scenario. It is also viewed as an instrument of cost reduction and effective
communication with people and institutions associated with the banking business.

Banking and technology have always been closely linked, each facilitating and encouraging
advances in the other, but in recent years, the banking and technology worlds have become
inseparable. Not only are banks embracing technology to improve on their functions, a tech
savvy customer base is readily accepting these technological advancements and increasingly
expecting them from banks. Financial institutions, as compared with other industries, rely more
on gathering, processing, analyzing, and providing information in order to meet their customers’
needs. This is reason why banks were the first to start automated information processing
technology. In order to successfully take advantage of the benefits of this massive increase in
customer and environmental data, embracing advances in technology will be essential. As
technology has advanced at a rapid rate banks have attached ad hoc solutions and work-around
on to ageing systems to cope with this accelerated rate of change and enable essential and
customer-expected new services (such as internet banking) in order to answer competition and
remain relevant and progressive in the public eye. Today, financial institutions have been heavily
investing in technology. Firstly, they anticipate a reduction in operating costs through
efficiencies in streamlining back-office processing and elimination of error-prone manual input
of data. Secondly, institutions find ways to serve their current customers and attract new
customers by offering new products and services. Lastly, with new techniques they can enhance
the convenience and value of existing products and services. Advancement in information
technology has made it possible for retail and wholesale customers of banks and other financial
institutions to deliver a range of products and services at ease with just a click of their computer.
This type of banking services is primarily referred to as e-banking services.

E-banking is a product designed for the purposes of online banking that enables an individual to
have easy and safe access to their bank account-banking is a safe, fast, easy and efficient
electronic service that enables access to bank account and to carry out online banking services,
24 hours a day, and 7 days a week. Through the addition of new digital channels such as internet
and mobile banking, banks now have more data available to them now than in the entire history
of banking. Electronic banking as the delivery of banks' information and services by banks to
customers via different delivery platforms that can be used with different terminal devices such
as a personal computer and a mobile phone with browser or desktop software, telephone or
digital television(Daniel, 1999). E-Banking plays a pivotal role in providing satisfaction for the
customers as well employee of the bank. E-Banking includes various types of digital payment
methods which includes card payment, mobile payment, digital wallet, financial services etc. It is
simply the use of electronic and telecommunications network for delivering various banking
products and services. With a help of e-banking, a customer can access his account and conduct
many transactions using his computer or mobile device. Besides, it is also a way of doing
banking transaction that offers less waiting time and a higher spatial convenience than traditional
branch banking with significantly lower cost structure than traditional delivery channels. Use of
e-banking is beneficial to both the banks and its customers. For the bank, they have to incur low
transaction cost, minimization of human error and lesser paperwork. On the other hand, customer
can access their account and transfer from anywhere and enjoy lower cost per transaction.

Nepal Rastra Bank (NRB), the central bank of Nepal, as empowered by NRB Act 2002 has been
entrusted with carrying out the duties of regulating and overseeing payment institutions and
establishing and promoting the system of payment, clearing and settlement and to regulate these
activities in order to develop secure, healthy and efficient system of payment in the country. It is
believed that a well developed payment system ultimately contributes in strengthening the
domestic financial system. In recognition that payment systems are an integral part of every
country’s financial system and are vital for its soundness and for monetary policy
implementation and capital market development. The NRB is committed to the safety and
efficiency of Nepal’s National Payments System (NPS). In this context, NRB has statutory
responsibility for the e-banking systems in Nepal.

The world is changing rapidly which has resulted in the rapid and frequent changes in the
lifestyle and taste of human being. In banking industry, nowadays, customer prefers e-banking
services rather than branch banking. Technology has broken the geographical, legal and
industrial barriers and has created new products and services. Since its introduction, an E-
banking service in Nepal is one of the most booming services in banking industries. Banking
industry has taken a leap from traditional to modern banking services in the last decade due to
technology induction and product innovations. Adopting new technology and process will help
banking industry of Nepal to improve customer satisfaction, reduce workload and achieve a
significant competitive advantage. It has been proven that the COVID-19 virus can travel across
surfaces; paper currencies being the most common among them despite World Health
Organization(WHO) stating that the deadly virus was airborne and transmits through coughing
and sneezing. COVID-19 has severely affected the operation of some businesses but on the
brighter side we can see a huge surge in online business activities. As such, in this global crisis,
the role of e-banking and electronic payment gateways plays a vital role.
Statement of the Problem
COVID-19 has transformed the way the banking industry provides services shifting from
traditional to online medium. In traditional banking, the customer has to visit the branch of the
bank in person to perform the basic banking operation. On the other hand, E-Banking enables
customers to perform the basic banking transactions by sitting at their home or office through the
use of laptops and cell phones. Banking industry has to ensure that the introduction of electronic
banking services provides optimum customer satisfaction and proper management of customer
handling in order to enhance the banks’ profitability. There a number of technological issues
with regard to e-banking compared to the traditional brick and mortar banking services. Being at
the forefront of technology adoption for many years, the financial services industry faces cutting
edge technological issues before other industries (Dewan & Seidmann, 2001). It is essential to
update technologies and remain cost effective and customer friendly. Since, technologies are
developed by third parties, banks must be careful about the risks involved in it. Most of the
customers of Nepal are still unaware about e-banking facility. People who are not comfortable
with internet and computer use often find learning it to be a major challenge. On the other hand,
online banking users are also not confident about its reliability in security from the threat of
hackers. The e-banking services and mobile applications of each and every bank are still
unsatisfactory and possess a lot of lags and shortcomings. This has led to huge number of
customer dissatisfaction and complaint. Transactional risk is the most common type of risk e-
banking. It includes incorrect transaction, processing, compromises in the integrity of data, data
privacy and unauthorized access to bank’s systems etc. The security risk of e-banking also arises
from hacking threats and unauthorized access to the bank’s systems.

Research Question
The research questions will be as follows:
 What is current status and trends of use of e-banking during covid19?
 What are the challenges faced by users and providers during covid19?
 What is the effectiveness of e-banking during lockdown because of covid19?
Objectives of research

The main objective of this study is to find out the adaption of E-Banking and its effects in
commercial banks during Covid-19. Some of the other objectives are:

 To analyze the e-banking facilities provided by bank to users during covid19.

 To understand the current status and trends of use of e-banking during covid19.
 To identify challenges faced by users and providers during covid19.
 To find out the effectiveness of e-banking during lockdown because of covid19.

Research Hypothesis

The hypothesis of the study will be as follows

H1: There is significant relationship between ease of use and adaption of e-banking.

H2: There is significant relationship between security and adaption of e-banking.

H3: There is significant relationship between efficiency and adaption of e-banking.

H4: There is significant relationship between access of internet and adaption of e-banking.

H5: There is significant relationship between cost and adaption of e-banking.

Research methodology

The purpose of this chapter is to outline methods and sequential steps adopted in analyzing the
problem to achieve the pre-mentioned objectives. Reliable and relevant study can be made
possible only by applying scientific method. The primary purpose of this chapter is to discuss
and design the framework for the research. It provides comprehensive description on research
design, different types of data collected, source of data, sampling method, and the account of
methods and procedures used for presentation, analyzing and interpreting the data.

Research Design
It is an overall plan for the activities to be undertaken during the course of research study. It is a
logical and systematic planning and directing a piece in research. It is conceptual framework or
structure guiding the collection and analysis of the data, the research instruments to be utilized
and the sampling plan to be followed or within which the research is conducted. The data will be
collected from the respondent directly and through the data and information of past literature,
websites and books. Therefore, survey research design will be used in this study as it seeks
response directly from the respondent. To collect the data and information from the respondent
questionnaire will used.

Population and sampling

All the customers using e-banking and employees of commercial banks will be considered to be
the population for the study.

Data analysis tools

Some techniques will be used for the analysis purpose. In this study, we will use the techniques
like bar diagram, tables and pie-chart. In this study, descriptive statistics such as mean, standard
deviation, percentage and inferential statistics such as ANOVA, regression analysis, Z-test, F-
test and chi-square will be used.
CONCEPTUAL FRAMEWORK

The conceptual framework represents the connection between variables in the study and shows
the relationship graphically.

Independent Variables Dependent Variable

Ease of use

Security

Efficiency Adaption of e-
banking

Access of internet

Cost