NBL Technology Transformation

Technology Transformation- Nepal Bank Perspective

Introduction 

The evolution from ‘brick and mortar’ structure to ‘click and order’ model started with the emergence of Information Technology and its usage in the Banking sector. The use of IT in Nepalese industries traces its roots after the Financial Sector Reform Program in the mid of 1980's (2037 B.S). Nepal Bank Limited (NBL), who marked the beginning of an era of formal banking in Nepal, started its computerization process since 2048 B.S with YBPASS system in its main branch office. After implementation of comprehensive Financial Sector Reform Program in 2001 (2057 B.S) formally by Nepal Rastra Bank, Nepal Bank mechanized its banking operations implementing PUMORI financial system, one of the local accounting solutions by Mercantile Office System Pvt. Ltd.

In the year 2059 B.S (2002 A.D), under the Financial Sector Technical Assistance Program of World Bank and DFID, a management team, ICCMT, consisting of international bankers from bank of Scotland was appointed to restructure NBL. Since then Nepal Bank step forwarded its banking operations electronically signing contract with 3I Infotech to implement core banking solution (CBS) named NEWTON. In 2062 B.S NBL migrated 44 branches in decentralization mode to NEWTON with the mission of Total Branch Automation (TBA). In 2065 B.S, 3I Infotech upgraded NEWTON software to KASTLE CORE. In year 2065 B.S NBL migrated remaining 66 branches to PUMORI III standalone mode as 3I Infotech couldn't certify that KASTLE CORE is an upgraded version of NEWTON. Since then NBL was delivering financial services through two parallel CBSs, NEWTON and PUMORI. 

Transformation Stage - Obstacles and Challenges

After declaration of liberalization policy in Nepalese trade and business sector that allowed new entrants, private sector and joint venture banks delivering technology based financial services, NBL has to face cutthroat competition in banking business. Especially, when the private banks were more focused on profitable ventures and better customer service NBL had to provide services to the remote areas all around the nation to serve the rural people and community as well.

Nepal Bank was established with the corporate vision "Pioneer Bank with complete banking solution" however it was difficult for NBL to sustain the technological developments with the implementation of Total Branch Automation (TBA) in standalone mode. The main disadvantage of TBA was that no data centre was established and therefore customers’ data were available only at the branch where the customers have account. Moreover, each branch needed to take back up of their data and send it to head office in storage device for safe keeping.

While Nepal Bank was on parallel operation with two CBSs, NEWTON and PUMORI, information technology revolution in Nepalese banking industry gained momentum with private banks opted to have a single centralized database with the emergence of self service banking technologies such as ATM, Online Banking and Mobile Banking. This situation has conveyed a factual confront for Nepal Bank to cope up with technological challenges like synchronization, interoperability, data exchange, data transfer, data security and at the same time providing contemporary banking services.

It has been an uphill task for Public Sector Bank like NBL to join the technology band wagon. For transformation of the bank it was extremely essential to lay down solid and sound technology platform. NBL started exploring possibilities of deploying centralized CBS to address ever increasing customer demand, technology based products and services at par with the industry, integrated MIS and robust yet secure system. However data migration, implementation, deployment, testing and training were huge challenge as all 125+ branches spread over different geographic location were in distributed database. The task would have taken not less than couple of years. Owing to the fact, NBL sought mid way, an interim solution whereby one of the existing CBSs to be upgraded and rolled out to all branches in a centralize database completely migrating the other one.

Though it was interim arrangement, yet it has managed to harness technology reallocating multiple database servers to single centralized database in the year 2072 B.S. NBL has leapfrogged into the era of innovation in banking adopting latest technologies on PUMORI IV platform (both desktop and web-based) in centralized mode. Now NBL has been providing IT enabled services and delivery channels such as ATMs, Online Banking, Debit Cards, Mobile Banking, NFC enabled e-ticketing system for local transportation, ECC, ASBA and more. This new adoption has also facilitated NBL to implement a centralized Management Information System (MIS) and reporting arrangements. Centralized payroll system, centralized Trade Finance operation and centralized Credit Administration are few of the outcomes of the technology integration. Recently, NBL IT team has developed a centralized web based MIS and Pension system. These all growth fueled by innovative initiatives has been possible only because of technology transformation and utilization of right resources at the right place.

Future Opportunities

Technology is a business driver and is vital for the continuous success and to spur growth of business. Technologies facilitate banks to introduce new products and services, reach close to the customer, and narrow down the digital divide thereby supporting financial inclusion. The emergence of self service banking technologies such as ATM, Online Banking and Mobile Banking has usher the concept of anytime and anywhere banking. With the advancement in these technologies new products are gaining more attention amongst customers’ reasons being lower cost of operation and easily accessible services. For example Mobile banking, a symbiosis of technology and financial services is the hottest area of development in the banking sector. However, the rate of success of these new products will depend on the suitability of the technology selected by banks. For a public sector bank like Nepal Bank in order to achieve targeted goal with two mission statements "Network for inclusion" and "Enhancing the Value" should be able to facilitate its customers with high-tech services. It also needs to re-imagine tech-enabled services continuously and be ready to face innovative technological challenges such as,

  • Security and compliance to the security mandates of all forms of electronic products, services and transactions.
  • Implementation of open standards for banking functionalities.
  • Growing customer awareness and need of transparency.
  • Close integration of bank services with web based e-commerce or even disintermediation of services through direct electronic payments (e-Cash).
  • More convenient international transactions
  • A well defined IT plan/policy and audit plans

NBL technology adaptation will definitely help to reshape itself in Nepalese banking industry in recent future. Nepal Bank is committed to take up technology trends in safe and secure manner to deliver innovative, effective and efficient services to the satisfaction of people of different demography.