Interview | ‘A robust fintech sector will contribute to Nepal’s economic growth:’ Lok Raj Sharma, Co-founder, Nepal Payment Solution Pvt Ltd

‘Many Nepali banks have introduced mobile banking apps and online banking services. But there still is room for improvement in terms of automation and digitization in certain areas.’

NL Today

  • Read Time 7 min.

CEO of Nepal Payment Solution Pvt Ltd, a leading Fintech company, Lok Raj Sharma, is Founder and chairman of Kisan (Nrn) Laghubitta Bittiya Sanstha Ltd.  Sharma holds a Master’s degree in International Business Management from the De Montfort University, UK, and is pursuing PhD in Fintech innovation from Swiss School of Management, Italy. Born in Jumla, Sharma lived in Denmark for more than 17 years and is chair of social entrepreneurship development Committee of the Non Resident Nepali Association (NRNA). He spoke to Nepal Live Today on  prospects and challenges  of the IT sector in Nepal. Excerpts of the interview:

Could you tell us about Nepal Payment Solution Pvt Ltd? Why did you decide to establish this company? What type of services do you offer?

Nepal Payment Solution Pvt Ltd, a fastest growing fintech Company, is promoted by a group of NRNs and industrious personalities. It is incorporated in the Company Registrar Office of Nepal and licensed by Nepal Rastra Bank for conducting as a Payment System Operator (PSO) in Nepal. NPS is a leading payment gateway and switch operator in Nepal that was established to offer secure and convenient payment solutions to its members and clients. Its purpose is to replace traditional payment practices by a robust tech-based payment system globally. We aim to help the national economy by providing a robust tech-based payment system.

Why did you decide to establish this company? What type of services do you offer?

The purpose of establishing this company is to utilize international best fintech practices in Nepal. Finance and technology has a long history of mutual reinforcement. The ease of using robust tech-based payment system has created an equilibrium in economic scale in the national economy. As a result of the rise of the modern payment system based on technology, almost all traditional payment systems (i.e. standalone payment systems despite using traditional technologies) are in a state of upheaval.

We provide a unified payment gateway which can provide better services using secure technology with a cost optimization strategy and removing integration barriers that the Nepali financial institutions are experiencing currently. We have next generation payment solutions, developer-friendly APIs and hassle-free integration. We offer a fast, affordable, and secure way to accept payments online for all stakeholders of the ever-growing payment ecosystem. The company has partnered with leading banks in Nepal and offers a range of services such as Aggregated Payment Gateway, Onelink, Insta fund Transfer, Wallet Transfer and more. NPS offers a range of payment solutions services to individuals, businesses and organizations and we are the most cost-efficient service provider in Nepal.

You work with leading banks in Nepal. How do you see the status of automation in Nepali banks?

Yes, we work with almost all the banks in Nepal which are still in a primary stage of complete Fintech solution. It was really a difficult situation to connect with the banks at the beginning stage. There were no sufficient APIs at the time our company was established. Every service provider should have to have separate integration with its own middleware in the bank which was increasing cost, time and security risk.

‘Nepal has enormous potential to be developed as an international tech hub. It requires a concerted effort by the government of Nepal, private sector, and civil society to achieve this goal.’

As of now, it’s improving much better. We have implemented API management solutions to the most leading banks. After that no need to implement separate middleware, which reduces cost and months of integration time to a few minutes. Further there has been significant progress in recent years, especially in the adoption of digital banking technologies. Many Nepali banks have introduced mobile banking apps and online banking services, making it easier for customers to access their accounts and carry out transactions remotely. 

However, there is still room for improvement in terms of automation and digitization in certain areas, such as loan processing, account opening, and customer service. Nonetheless, the trend toward automation in Nepali banks includes internal process automation and external automation processes, for which NPS is helping with payment system automation through various services that serve to banks, PSPs, and other merchants services in a seamless manner. Automation in Nepali banks is expected to continue as technology advances and customer demand for digital banking solutions grows, for which NPS aims to provide faster online transactions, more secure, and more convenient for customers through payment system automation.

Nepal is making rapid progress in terms of fintech (financial technology). What do you think the government and Nepal Rastra Bank should do to create an enabling industry for the fintech sector in Nepal?

It is partially true that Nepal is making rapid progress in terms of fintech (financial technology). There is a long journey to move ahead by creating a robust fintech ecosystem. Major fintech companies including NPS are playing a crucial role in the fintech journey in Nepal.  Fintech companies have been contributing greatly to the national economy as well.  Therefore, what we believe is, the government of Nepal and Nepal Rastra Bank must play crucial role for enabling and fostering Nepali fintech industry by establishing a clear regulatory framework, creating fintech sandboxes for testing products and services, facilitating access to funding, promoting collaboration among the government, NRB, and the fintech industry. In addition to this, it has been felt that investing in financial education programs to increase awareness and understanding of fintech products and services among consumers are also crucial roles of the government entities. Furthermore, 100 percent FDI should be allowed for fintech companies (PSO & PSPs), along with basic security measures for the Fintech Industry. By taking these steps, Nepal can foster an innovative, competitive and robust fintech sector that meets the needs of its citizens and that can contribute to the country’s economic growth.

How do you see the prospects of developing Nepal as an international tech hub? Could you suggest three policy reforms the government needs to do immediately to support the development of the IT sector in the country?

Nepal has enormous potential to be developed as an international tech hub, but it requires a concerted effort by the government of Nepal, private sector, and civil society to achieve this goal. The prospect of developing info-tech has high potential in Nepal because the young population are driving with robust technologies, have no language barriers, and have high potential in the software industry and use of artificial intelligence. Nepal has a growing pool of talents such as IT professionals, a competitive labor market, and a supportive business environment, all of which can help to create an attractive ecosystem for the tech industry. At the same time, Nepal is a green energy country situated between two of the biggest countries–India and China. So Nepal has endless opportunities in IT industries. However, there are still some challenges that need to be addressed to fully realize the potential of Nepal’s tech industry.

Here are three policy reforms that the government should immediately implement to support the development of the IT sector in Nepal. First, the government needs to improve education related policies in the IT sector. For example, quota system practices need to be removed from IT colleges. Second, the FDI should be open and have no limitation /threshold for in and out investment so that the international communities can easily come and invest in the ecosystem without any obstacle to IT infrastructure. Finally, the IT industry is the value creation business. So there is a need to improve the current policy of public listing, bonus shares, primary shares, secondary shares, and legal rights, regarding such shares and it should be open and should be expanded outside of the country too.

By implementing these policy reforms, the government can support the development of the IT sector in Nepal, attract more foreign investment, and position itself as an international tech hub.

How do you see the quality of Nepali IT graduates? What should the government do to liberalize the IT education sector in the country?

In Nepal, the graduates are highly skilled. They have good command in English and are familiar with cutting-edge technology. One very interesting experience about IT graduates is they are earning a much better salary while studying compared to other sectors. But brain drain of talented graduates is a major problem in the IT industry. As a result, there is always a shortage of IT professionals. Thus the public and private organizations should rethink their benefits,  and consider the working environment and growth plan of such graduates and it should be in international standard.

‘Nepal can benefit from international best practices. Nepal can learn about the latest IT trends and technologies by collaborating with overseas organizations, institutions, and businesses.’  

The government should invest in improving Nepal’s digital infrastructure, and encourage collaboration and networking between Nepali tech companies, startups, and SMEs, as well as between domestic and international organizations. The government should also create a conducive business environment that promotes innovation, entrepreneurship, and investment in the tech industry.

Do you see the possibility of developing Nepal as an IT education hub?

Yes, Nepal has the potential to become an IT education hub in the region. Nepal has been making significant strides in the IT sector in recent years. In addition to its growing pool of skilled IT professionals, Nepal also has a favorable cost of living and low-cost labor compared to other countries in the region.We have a high number of young population and potential of IT innovation.

Furthermore, Nepal’s government has been implementing policies to promote the development of the IT industry, including tax incentives and other support measures for IT companies. The government has also been investing in improving the country’s IT infrastructure, including broadband connectivity, to facilitate the growth of the sector.

Moreover, Nepal’s geographic location and time zone makes it an attractive destination for outsourcing IT services, especially for companies in the Asia-Pacific region. This provides an opportunity for Nepali IT professionals and students to work on global projects and gain valuable experience.

Overall, with the right policies, investments, and partnerships, Nepal has the potential to become a thriving hub for IT education and innovation.

You worked in Denmark for several years. What lessons can Nepal learn from Danish businesses and industry?

I would like to sum up the ethos of Danish businesses and industry in 3Ps. First, policy which means industry-friendly policy by the government. Second, promotion, promotion of start-ups by stakeholders.  And third practices, ethical practices by professionals.

Technology sector has emerged as a critical driver of economic growth and development in many countries and Nepal may benefit from international best practices in this field to boost its own IT sector. Nepal can learn about the latest IT trends and technologies by collaborating with overseas organizations, institutions, and businesses. Investing in IT professional training and development programs, as well as allowing overseas educators to conduct training programs in Nepal, will assist Nepali IT workers in improving their skills and knowledge. Investing and promoting innovation and entrepreneurship, and implementing international quality assurance standards and procedures can all assist Nepal’s IT sector become more competitive.

Looking at international practices, we can see where Nepal has lagged behind in the IT sector. Nepal essentially lacks suitable education and training programs that could support effective development in the IT industry. In Denmark, there are proper education and training systems that generate highly qualified IT workers. Human capital and the right manpower are essential if Nepal is to grow as an international tech hub.

Transparency and anti-corruption measures are crucial for the growth and development of the IT sector in Nepal. In addition, entrepreneurs’ support is another essential element that can empower businesses in this sector. It is important to foster cooperation and collaboration between all stakeholders involved in the development of the Fintech industry in Nepal.

Nepal has immense potential to become a hub for the fintech and IT industries. With its growing pool of skilled professionals, supportive business environment, and favorable government policies, Nepal is well-positioned to attract investment and foster innovation in these sectors. However, there are issues that need to be addressed. They include improving digital infrastructure and education policies and creating a favorable regulatory environment for fintech companies.