Kathmandu. Nepal’s banking sector has been undergoing rapid transformation in recent years. Modern services like digital banking, mobile apps, online transactions, QR payments, cyber security, and automated systems are taking the banking system to new heights.

The number of digital mediums used by customers is increasing. Customers are looking for easy service. However, with this pace of change, there are some serious challenges within the banking sector. One of the serious challenges facing the banking sector at present is the lack of skilled manpower. However, there is also an overstaff.

“Banks and financial institutions and branch offices have been merged. As a result, a large number of employees have also merged,” says a banker, “Due to which the problem of overstaff has increased in the bank.” ’

The bankers say that this has increased the operating costs of the banks. Bankers say that this has also affected the efficiency and performance of the institution. Despite the large number of employees, the problem of work division based on the required skills and qualifications is not clear and the problem of weak performance, unclear responsibilities and delay in institutional decision-making process has increased in the banking sector.

According to NRB sources, human resource management has become challenging even in big banks. Some banks have gone beyond the requirements and qualifications and appointed employees on the basis of influence or recommendation, which has created an environment of overshadowing the qualified and skilled manpower. The long-term performance of the banks has been affected due to personal impact and temporary management rather than institutional capacity building.

Another major problem in the banking sector is the lack of skilled employees. In the second quarter financial report of the current fiscal year, Citizens Bank has said that the exodus of skilled manpower from the banking sector has added to the challenges. With the use of digital technology increasing at a rapid pace, there is a need for competent manpower to run modern systems. However, many employees are not adequately proficient in new digital systems, software and cybersecurity technologies, banks said in their quarterly financial statements.

Similarly, the problem of Laxmi Sunrise Bank is the exodus of manpower. As a result, the banking sector has been challenged, the bank said in the report. The effective implementation of digital services has become challenging especially when the employees working at the branch level and rural areas are not technology-savvy. Problems such as delay in the operation of the system, time to resolve the problem and inconsistency in the quality of service are increasing when customers expect online service.

The lack of digital skills is also at risk of weakening the competitiveness of banks, banks said in their quarterly financial statements. Failure to adopt new technology risks slowing service delivery, weakening customer experience, and lagging behind banks in innovation.

At the same time, the migration of skilled employees abroad has also become another challenge. Many capable manpower are moving out of the country in search of better salaries, career opportunities and international experience. This has led to a lack of experience and efficiency in the banking sector, according to some banks in the second quarter financial statements.

Even if banks recruit new employees, there is a risk of poor institutional memory and instability in service quality due to the loss of experienced manpower. Some banks have pointed out the migration of manpower as a major challenge and have stated in their report that a long-term HR strategy is needed.

Similarly, the imbalance between branch expansion and human resource management has also become another problem. Although many branches have been opened under the pressure of competition, the lack of manpower management according to the service volume in these branches has created a situation of inactive employees and excessive workload in some places. Banks have said that this will reduce the morale of the employees, make a difference in the quality of service and increase institutional expenses.