Anamol Bhushan Khadka
← All writing

EssayFintechFinancial inclusionNepal

Banking the Unbanked: How Nepal's Fintech Wave Can Reshape Financial Inclusion

A third of Nepalis still sit outside the formal financial system. From the 2008 crash to COVID-19 to M-Pesa and UPI, here is why fintech could be the bridge, and what it will take to reach the last mile.

Anamol Bhushan Khadka21 September 2026 · 7 min read

Nepal’s financial inclusion remains uneven despite real progress. Although the share of people with a bank account rose from 33.8% in 2014 to 67.3% in 2022, roughly one-third of the population still lacks access to formal financial services. The gap is sharpest in rural areas, where there are only 251 bank accounts per 1,000 people.

This is why financial inclusion for Nepal’s unbanked population matters so much, and why the country’s growing FinTech (financial technology) wave holds such potential to close the gap.

Roughly one in three Nepalis still lives outside the formal financial system.

How the 2008 crisis opened the door for FinTech

To understand how FinTech might help Nepal achieve financial inclusion, we first need to look at how two shocks, the Great Recession (2008) and the COVID-19 pandemic (2020), changed financial services. The Global Financial Crisis of 2008 was a turning point for the world economy, exposing the weaknesses of the traditional banking system.

After years of rising real estate prices and expanding mortgage debt, the US housing market collapsed in 2007. By the end of 2011, home prices had fallen by more than 20%, triggering widespread losses for banks and financial institutions (BFIs) (Weinberg, n.d.).

The crisis led to reduced interbank lending, a frozen credit market and a global recession (Scott, n.d.). It spilled over into the European Union, where public confidence in the European Central Bank (ECB) declined for the first time since its establishment. The resulting instability eroded trust not only in financial institutions but also in governing bodies such as the European Commission and Parliament, signalling a potential “re-nationalization”. “Anti-capitalist” sentiment surged in Germany, where around half of the population came to see the social market economy as unjust (Roth, 2009).

Even though the US Federal Reserve rolled out extensive liquidity programmes and Congress passed the Dodd-Frank Act (2010) (Weinberg, n.d.; Scott, n.d.), public trust in traditional banking fell, opening the way for innovative alternatives. FinTech emerged as a new player (Hirt, 2022), offering accessible, transparent, customer-centred solutions built on smartphones and cloud computing. Tech-driven digital finance took off, giving rise to companies like PayPal, other peer-to-peer payment platforms and credit-access services, all operating independently of traditional banks.

How COVID-19 sped things up

Flat illustration of masked office workers sharing files through the cloud
The pandemic pushed everyday finance onto phones and into the cloud.

The global pandemic acted as a catalyst for FinTech adoption, with eight in ten UK adults now using these tools (Hirt, 2022). A McKinsey & Company report (2020) found that around 75% of FinTech users intended to keep using the new services after the pandemic. Meanwhile, the WTO reported a rise in e-commerce, with big players such as Amazon and Alibaba seeing significant revenue growth.

Digital payment volume in Indonesia grew by nearly 40% in 2020 (“Open for Business,” n.d.), and the digital payments market in Southeast Asia is expected to reach USD 1,661 billion by 2029. In India, the Unified Payments Interface (UPI) became a major driver of online payments, with transactions worth ₹8.27 trillion in December 2021 alone (“Unified Payments Interface,” n.d.). This global shift in payment systems is a great opportunity for countries like Nepal to promote financial inclusion and foster economic growth.

Is Nepal digitally ready?

FinTech offers promising solutions for financial inclusion, but its effectiveness in developing economies like Nepal depends on the country’s digital readiness. By 2021, Nepal had more than 42 million cellular connections, with mobile transactions increasing from NPR 37.31 million to NPR 218.3 billion. By early 2023, 51.6% of Nepalis had access to the internet, though urban–rural access is still deeply unequal.

On the bright side, many private companies have invested heavily in internet and mobile banking, and as a result the digital commerce market is expected to reach USD 3.94 billion by 2029. On the government’s side, the Digital Nepal Framework (2019) aims to integrate ICT tools into economic growth and development (World Bank, 2022). In 2022, Nepal signed a $140 million agreement with the World Bank for the Digital Nepal Acceleration Project (World Bank, 2022), to improve digital infrastructure and bring internet access to 80% of the population.

In 2023, Nepal’s National Payment Interface (NPI) was linked with India’s UPI, a collaboration led by Nepal Rastra Bank (NRB) and the Reserve Bank of India (RBI) to make cross-border remittances between the two countries easier. Steps like these show Nepal’s commitment to modern technology, but the infrastructure needed for FinTech adoption is still inadequate, especially in rural areas where banking remains underdeveloped.

Closing the gap between cities and villages

Illustration of a lone figure in a rural field, with a city skyline far in the distance
Rural Nepal has roughly one bank branch for every five in the cities.

With growing digital infrastructure, Nepal has a crucial opportunity to narrow gaps in financial inclusion, above all the rural–urban divide. The figures make this clear: rural municipalities have 8.54 bank branches per 100,000 people, compared with 45.67 in urban municipalities.

In this situation, FinTech platforms offer a real chance of transformation. Digital and mobile banking apps can deliver financial services to remote places without the need for physical branches. Microloans and credit offered through digital platforms can give affordable finance to rural entrepreneurs, farmers and women, fostering economic activity in underdeveloped regions.

Mobile banking takes off

Over the past decade, mobile banking in Nepal has grown remarkably, from 468,000 users in 2014 to 18.31 million in 2022. Initiatives such as the FinTech Innovation Challenges hosted by Nepal Clearing House Limited (NCHL) are working to improve access to credit and finance for micro, small and medium enterprises (SMEs), including women-led businesses. New financial products, such as green bonds, risk-informed insurance pricing and climate-linked credit scores, are also building sustainability and resilience into Nepal’s financial sector.

Lessons from Kenya, Bangladesh and India

Successful models from other developing economies offer valuable lessons for closing the financial inclusion gap.

  • Kenya — M-Pesa. M-Pesa revolutionized financial inclusion, raising the share of adults using financial services from 26.7% in 2006 to 82.9% in 2019. Over the same period, reliance on informal financial services fell from 32.1% to 6.1% (Ndung’u, 2021).
  • Bangladesh — bKash. bKash has played a vital role in financial inclusion, particularly for women and people affected by natural disasters. Recent data show that 41.67% of registered mobile financial service users are women, and 57% of them live in rural areas.
  • India — UPI. Launched in 2016, UPI revolutionized digital payments, processing 48.6 billion transactions in 2021 alone. It is estimated to have saved the Indian economy roughly $67 billion through real-time payments.

Nepal’s progress in numbers

18.31Mmobile banking users (2022)
67.3%of people with a bank account (2022)
18,500POS terminals (mid-2023)
NPR 12bnin loans disbursed via mobile apps (2023)

Nepal’s recent initiatives, including the UPI link, NCHL, and payment platforms such as eSewa and Khalti, show the country moving forward in the digital economy. The rise of mobile banking, together with fixed deposits making up 55% of total deposits, points to growing trust in digital financial services.

The mobile banking landscape shows a promising growth trajectory. NRB data reveal a 25.6% increase in mobile banking usage within a year, valued at NPR 14.9 million at the end of fiscal year 2021/22. As of mid-2022, Nepal had more than 17 million mobile banking users, a 1.66% increase from the previous year (Mishra, 2023), with daily transactions averaging NPR 2.5 billion. The rapid rise of electronic banking channels shows in the number of point-of-sale (POS) terminals, which grew from 12,800 in 2021 to 18,500 by mid-2023. These advances are supported by the disbursement of NPR 12 billion in loans through mobile apps in 2023, a significant step toward better credit access for marginalized groups, particularly in rural areas with limited traditional banking.

What comes next

Illustration of children and a dog under prayer flags, looking up at a floating Himalayan city
The last mile: bringing digital finance to every corner of Nepal.

The Nepal FinTech Association projects that digital payment transactions will reach NPR 1 trillion by 2025, driven by smartphone and internet penetration and growing consumer confidence in digital finance. The government’s commitment to expand internet access to 80% of citizens and 4G coverage to 90% of the population by 2025 also supports FinTech adoption.

Together, these developments show Nepal’s progress toward an inclusive digital ecosystem. But their expansion and success will hinge on sustained regulatory support, technological adoption, continuous innovation and stronger public–private partnerships to carry digital finance to the last mile.

References

  1. Adhikari, M., Ghimire, D. M., & Lama, A. D. (2024b). FinTech and financial inclusion: Exploring the mediating role of digital financial literacy in enhancing access to financial services. Journal of Emerging Management Studies, 1(2), 117–136. doi.org/10.3126/jems.v1i2.71512
  2. Chopra, C., & Gupta, P. (2023). India’s digital leap: The Unified Payment Interface’s unprecedented impact on the financial landscape. World Economic Forum. weforum.org
  3. Digital penetration in Nepal’s geopolitics. (2023, June 17). The Kathmandu Post. kathmandupost.com
  4. World Bank. (2022, September 18). Government of Nepal and World Bank sign agreements for $415 million towards building infrastructure for digital development & regional transport and trade connectivity [Press release]. worldbank.org
  5. Unified Payments Interface. (n.d.). Wikipedia. Retrieved January 9, 2025, from en.wikipedia.org
  6. Hirt, J. (2022, April 3). Fintech was born out of the 2008 crisis: Now it will help us navigate another storm. City AM. Retrieved January 9, 2025, from cityam.com
  7. Mahmud, J. (n.d.). Digital payments and economic growth: Analyzing the contribution of bKash to Bangladesh’s GDP. International Journal of Research and Innovation in Applied Science (IJRIAS), 9(2), 55–63.
  8. Mishra, U. (2023). Individual performance and mobile banking: Role of task technology fit model. The Journal of Knowledge and Innovation, 9(1), 18–27.
  9. Ndung’u, N. S. (2021). A digital financial services revolution in Kenya: The M-Pesa case study. African Economic Research Consortium.
  10. Open for business: Southeast Asia’s digital payments revolution. (n.d.). Bloomberg (sponsored by HSBC). sponsored.bloomberg.com
  11. Roth, F. (2009). The effects of the financial crisis on systemic trust. Centre for European Policy Studies. aei.pitt.edu
  12. Scott, G. (n.d.). How the 2008 financial crisis affected the banking sector. Investopedia. Retrieved January 9, 2025, from investopedia.com
  13. Shah, D. K. (2023). A robust e-government strategy can help build an efficient, accountable and transparent government. The Kathmandu Post. kathmandupost.com
  14. Shrestha, R., & Tamang, L. (2023). Financial inclusion through FinTech innovation: Predicting user acceptance of digital wallet. The Batuk: A Peer Reviewed Journal of Interdisciplinary Studies, 9(2), 37–48. doi.org/10.3126/batuk.v9i2.57026
  15. Tan, A. (2024). Bridging the gap: Transforming financial inclusion in Nepal through fintech innovation and sustainability. SSRN. doi.org/10.2139/ssrn.5033847
  16. Weinberg, J. (n.d.). The Great Recession and its aftermath. Federal Reserve History. Retrieved January 9, 2025, from federalreservehistory.org