Rapid technological advancements and growing competition among financial institutions has led to tremendous growth for new banking products and services.

The trend of providing services to the customers via electronic banking distribution system or electronic database has gained a good momentum as almost all the banks today provide e-banking or online banking services to their customers.

Doing banking transactions online means ending the necessity to travel, face traffic jams, waste fuel, stand in long queues and avoid paper works thereby saving your valuable time.

Online banking has seen significant growth within less than a decade of its introduction particularly due to the fact that the service hands on the convenience of doing banking activities from anywhere in and outside the country.

“It is because of these advantages that customers are embracing online banking system for keeping track of their account balances and the withdrawals, payments of bills, make transfers and manage other finances, which would, otherwise, have taken many hours,” said Dipti Shrestha, senior officer at Nepal Investment Bank Limited.

Shrestha said there has been a significant rise in the number of customers using online banking system in the last three y eras. “As many as 3,000 to 4,000 customers of our bank are actively using online banking services,” said Shrestha.

Madhukar Shahi, e-banking in-charge at Nabil Bank Limited, said online banking is mostly popular amongst students, officials and foreigners.

Bankers say that have managed to pull a good mass of customers towards e-banking. They, however, said the use of online banking is just limited to utility payments and statement inquiry.

“The concept of internet banking is changing and so as the existing banking relationships and the trend of financial services. However, the concept is still not mature enough to attract higher customer base,” said Nigesh Ghimire, electronic banking in-charge at Laxmi Bank Limited.

Rapid technological advancements may invite certain vulnerabilities as well. These vulnerabilities provide space for modern day hackers to get into a bank account and make use of the same technologies in stealing money.

At this point of time, online banking has yet to win trust and confidence of so as to become a safe alternative to traditional banking practices. It is due to this insecurity issue that people are taking much time to shift towards online banking system.

There may be such risks in Nepalese banking system as well. It is essential to remain in the safe side to avoid such risks.

“To avoid possible dangers, users need to be careful when handling their username and password as well as in keeping their computers clean of any malicious software,” Ghimire said.

Narayan Prakash Bhuju, IT head at Kumari Bank Ltd, said internet banking is a cost effective delivery channel for financial institutions. “Minimization of risks, education to commoners about importance and practicability of online banking system can help to get more online customers,” Bhuju said.

He further added that only 10 percent of their active customer base is using online banking because of factors like lack of internet access, education and lack of proper understanding about online security and risks.

No one question the undeniable truth that online banking is here to stay as it gives much convenience to the users. Also, it tends to act in accordance with the go-green philosophy that is being promoted the modern world with minimum carbon footprint in business transactions.

source: Bhatta, M. (2010),"Banks see online market growing",republica,12 July 2010