Executive Interviews

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“Pioneers in the FinTech industry in Nepal –Digital payment for everyone” --Double interview with a CEO of a company developing software and providing ICT services and a CEO of an online payment service provider in Nepal-- (1/2)

2018/3/9（Fri）11:30

(Nepal/ネパール)

eSewa Fonepay Pvt. Ltd. - Largest alternate payment processor with 45 banks

-Please tell us about your companies.

 

Mr. Sapkota: eSewa Fonepay Pvt. Ltd. is a company working in digital payment space. It is licensed by Nepal Rastra Bank (Central Bank of Nepal). The company was established in 2012. We are the largest alternate payment processor with 45 banks, 1000+ services, 500K customers and 2.5 million other customers who are benefiting through our agent network. We have 160 employees and have achieved multi-faceted exponential growth in the past few years. We are operating a mobile wallet, merchant aggregation services and a real time settlement network of 45 banks in Nepal.

 

Currently, people use eSewa to make payments for all sorts of things including mobile top-ups, utilities, flight tickets, internet bills, bus tickets, school/colleges fees, financial services, licensing fees, EMIs,  government payments, etc.

 

Seventy percent of the population of Nepal does not have a bank account since banks are too far away from people living in rural areas and it is difficult to open an account for them. However, most of them have mobile phones. That is why we would like to expand our mobile payment system.

F1Soft International Pvt. Ltd. - Software development and IT services for FinTech companies

 

Mr. Sharma: F1Soft International Pvt. Ltd. is a company working in the field of software development and IT services since 2004. Over the years, we have streamlined our range of services by focusing on developing transaction banking products and have evolved into a FinTech (Financial Technology) company. Our acclaimed products include the mobile banking system, Internet banking system, tab banking system, card management system, digital wallet and online payment gateway. We are pioneers in introducing mobile banking and mobile financial services in Nepal and lead the market with almost 90 to 95% of Nepal’s financial institutions using at least one of our transaction banking products. We provide our systems to eSewa as well. Currently, we are working on integrating the entire mobile banking network to construct a platform where every bank can do transactions.

 

We currently employ over 200 people with expertise and competence in technology and management. Our skilled engineers, innovators and creative thinkers are eager to disrupt traditional access to financial services by inventing solutions that are much more efficient, affordable and real-time. Our efforts in FinTech innovation have been duly recognized by various national and international bodies including the 2014 International Business Awards (Bronze), 2013 FNCCI Service Excellence Award and the 2012 Red Herring Top 100 Asia Award. 

 

We are also working with the government of Nepal and a few other organizations to identify and develop solutions that benefit and improve the lives of the underprivileged across various sectors. While remaining focused on innovation, we are also looking to continuously improve our existing products and service standards.

 

The government in Nepal has just started introducing online systems for transactions, and my company was contracted for the introduction last year. For example, there are many Nepalese people who migrate from Nepal to South Korea, and it used to take 3 to 4 days for them only to file the application, but now they do can apply through online.

 

Our company is always focused on bringing new products to the market. We already started mobile banking 6 years ago when it was not so much introduced to my country yet. Every employee is motivated to try something new and challenging.

Innovation should be everybody’s responsibility.

Our company also tries to create a respectable working environment, so that every idea is given high importance regardless of which management level it comes from. In my company everybody is empowered to share ideas. We are all on the same page.

Mr. Sapkota: We aspire to simplify payments. As a company working in a highly dynamic market environment, we thrive to adapt to a changing business environment and technologies so that we can future-proof our investments and resources. We believe in participative management and courageous leadership. More than 90% of our employees are under the age of 35 and come from very cosmopolitan disciplines.

We work hard to make the working environment comfortable which has proved to be very effective in bringing out the best from our employees. Top management is always available to every employee for direct discussions, suggestions, feedback, and mentoring.

Revolution in telecommunication industry

-Please tell us the current market environment of your business.

Mr. Sapkota: Nepal is an under-developed country with a population of about 30 million and a GDP of about 22 Billion USD. Over the past one decade, there has been a revolution in the telecommunication industry with more than 90% of the population having access to mobile phones. This has resulted in high adoption of mobile subscribers and internet services.

eSewa is the first digital payment provider of Nepal with a mobile wallet. We are the pioneer in digital payment in Nepal with more than 80% market share. We operate the largest bank network with real time inter-bank fund transfers services amongst 45 banks and financial institutions. With the latest licensing regulation, new companies are required to get a license from the Central Bank to enter the industry.

As we have the right set of products that have great salability overseas, we are very eager to expand our business outside Nepal. We are looking to expand into emerging markets with somewhat similar market traits. Bangladesh, Myanmar and India are the top priority for us to expand in the near future.

Low literacy and lack of skilled human resources

Mr. Sapkota: There are many challenges.

1. Lack of Stringent Government Policies for the Industry
   The mobile payment (e-payment/alternate payment) industry in Nepal lacks stringent government policies and a framework. It has been only about two months since the first license for Payment Service Provider was issued to us. The government still does not have a clear focus or plans for development of this industry.
2. Lack of Skilled Resources
   As we are growing every day, we need skilled human resources especially engineers and business graduates. Due to the quality of education and this being a relatively new industry, we always find it difficult to find adequate human resources with required skills. On top of that, due to rising global demand for engineers, lots of skilled human resources leave the country for better financial benefits.
3. Low Financial Literacy and Technical Adoption
   Nepal has very limited access to finance. Only 33% of the population has access to finance. Banks and financial institutions are mostly available only in cities. Hence, there is a low level of financial literacy. Due to this, our cost to customer awareness and acquisition is very high. Similarly, there is low adoption of technology across customers, service providers, the government and other business operators in Nepal. This affects readiness and acceptability of digital payment options across services and businesses.
4. Size of Market and Economy
   The size of the market and economy of Nepal is small, making it less attractive for foreign investors.

Mr. Sharma: I fully agree with what Mr. Sapkota mentioned as challenges: lack of highly skilled human resources, a brain drain, and low technology adoption in Nepal. These are the big challenges even for software development companies like us.

I would add the low literacy rate as another challenge in my country. In Nepal, the literacy rate is very low at around 60% and technology literacy is even lower. Most of our products are technology based, even though they have a very huge potential, it is very difficult to attract customers because most of them do not understand our products or have difficulty handling them.

-How are you going to address those challenges?

Mr. Sapkota: We are trying to make several efforts to improve the situation.

1. Participate, voice and lobby for government policies for the industry with the stakeholders and government bodies including the Central Bank, Ministry of Finance, Financial General Comptroller Office, etc.
2. Training and development
   We provide regular off/on the job training to employees so that they can develop required skills and competence at work. Based on need, we also facilitate for out-of-the-office or abroad training and workshops. We also have tie-ups with IT colleges in Nepal where we provide them with technical training and assistance as well as campus recruitments.
3. Promotion and co-branding for awareness
   For more people to know about eSewa and use it as daily driver, we need to promote and create awareness amongst customers as well as service providers. We are working at both ends with joint promotions and co-branding with banks, financial institutions and service providers that are already with us. We are also mobilizing our agents on the ground to create more visibility, local campaigns and awareness.
4. Expansion to bigger market
   We are actively looking to penetrate into bigger markets like India, Bangladesh, and Vietnam to expand our business scope and presence.

Mr. Sharma: Our company also provides on/off the job training not only for our employees but for college students. In addition, we are trying the following efforts: 

1. Attractive and exciting work environment
   For our employees, we try to provide the best working environment so that they can think they are working in a startup. We always empower them and encourage them to come up with new ideas.
2. Localized products driven by market research
   As for the low literacy and technical adoption, we are constantly reworking and innovating on our products. We try different approaches to make our products more user-friendly and more useful for our customers. Even small tweaks such as use of local language and a pictorial menu make a huge difference to acceptability of the product.
3. Extensive promotion
   As most of our products are very new to the market, we have to really focus on promotions, and we need to educate the customers and create demand in the market.

*This interview article is divided into two parts.
This is the first part of the article.

< Part 2>