The evolution of mobile technology directly impacts the Agency Banking model. In recent years, we have seen profound process optimization thanks to the growing capabilities of smartphones and the continuous digitalization of the agent channel.
Today, a smartphone with a mobile application is enough for an agent to be a point of sale for numerous financial services, whether in urban or rural areas.
And suddenly Covid-19 comes and surprises us all!
Despite the changes in consumer behaviour and the challenges generated by the pandemic, the truth is that the Agency Banking channel will continue to be essential in the African context.
Agency Banking is crucial for Financial Inclusion in Africa. This model of distribution through agents is impossible to eliminate from the daily routines of people in Africa. Agents play an essential role where there are no banking facilities or financial services.
In rural areas, the agent is the link of trust between the Bank and the communities, where financial and digital literacies are weak or almost nil.
The proximity that the agent nurture among the unbanked and underbanked consumers, in small towns and villages, helps these communities getting the type of customer care that is lacking in these areas. The agent helps to simplify financial services and subscription processes, opening the door to new customers.
That said, let’s see what changes are anticipated in Agency Banking.
3 trends in Agency Banking
1. Compliance Processes as a Seamless Step
As we have seen, agents play often the role of Bank’s customer care in communities of rural areas. Their help is especially important when it comes to processes for regulatory requirements.
In Africa, virtually all countries impose close scrutiny of the financial sector due to issues of corruption and security. Measures such as the KYC process become essential in combating fraud and crimes of terrorism.
Many consumers complain about the long processes of manual verification of documentation and onboardings by paper forms. Adhering to a simple financial service in these cases can take more than 2 weeks.
The solution is obviously in digitization.
However, due to technical barriers, many banks have failed to digitize some mandatory compliance processes.
The improvement of the experience of last-mile services will therefore involve the integration of onboarding and the verification of requirements in a single process.
Let’s take the BVN requirement in Nigeria as an example: the customer starts the onboarding process with KYC to sign up for a financial service. In one of the steps of the process, the customer is asked to proceed with the BVN enrollment.
In the future, joining financial services will be a single digital process assisted by an agent, and it will not take more than a few minutes.
The speed and quality of the service will therefore be key factors influencing the consumer’s choice.
But not only. The agent can be a huge influence on consumers choice also. The agent will suggest the provider that offers the best onboarding experience and causes him less pain points, as he is part of the process through his monitoring and assistance.
Thus, the Bank will have to be concerned not only with the experience of the last-mile consumer but also with the experience of the agents, as we explained next.
2. The battle for Brand Advocacy by the Agents
Banks have already realized the advantages of Agency Banking. However, building and maintaining an exclusive agent network is not an option to any player.
So, it is a very common practice to invite and recruit multibrand agents.
They are basically street agents or merchants who provide services from several banks. Although a street agent is quite different from a merchant, they both have an entrepreneurial outlook and both make money through sales commissions. Usually the street agent sells exclusively banking services or telecommunication services. The merchant is an agent who owns a small business and takes advantage of his shop to sell financial or telecommunications services.
It is normal for agents to work with several brands and sell services from several banks, as they increase the likelihood of satisfying more customers and consequently earning more commissions.
And it is precisely here that the struggle begins.
Currently, victory is on the side of the banks that have the most digitalized processes, that offer faster onboarding timings and that seamlessly support the service, anticipating friction of field conditions (connectivity-energy-data-literacy). The speed of the processes allows agents to serve more customers and make more sales.
What will happen in the future when all banks have 100% digitalized processes?
The trend will be the continuous improvement of the relationship with agents.
Software solutions for Agency Banking will include more and better CRM tools for agents: Agent Relationship Management (ARM).
The aim is to win the preference of agents so that they advocate a Bank’s brand or a service instead of the competitor’s.
This “loyalty” of agents can only be achieved through an effective ARM strategy. More personalized training, better communication between Bank and Agent, more transparency in operations, greater visibility for the agent of his commissions, fast response in support, are some of the points that Banks will be able to improve with ARM systems.
ARM challenges will be increasingly relevant, especially in a context where super apps are another trend.
3. Super apps in Power
Imagine yourself as an agent. You sell services from several banks.
However, one of the banks has a Financial Services Provider and makes available other types of external services such as utility payments, payment for third party services, local government services, etc. Multiple services in a single app, and with the flexibility to add new services, without any exchange of equipment or software.
Isn’t it much more convenient to have all this in one solution?
You will certainly prefer to advise and promote the Bank that offers you this solution.
Super Apps allow to expand the offering of Banks through simple and fast integrations. Flexibility will undoubtedly be in the future of Agency Banking.
A super app is a mobile application that has several apps within itself, that is, it offers services from other apps through integrations, in an umbrella model.
This model follows a marketplace logic in which it is possible to add any type of 3rd party service. The aim is to increase sources of revenue per agent and maximize resources.
How to be prepared for change?
Most Banks are already aware of the challenges ahead.
Agency Banking solutions that are heavy and limited in functionality are one of the most difficult to overcome. This error is expensive for banks, since these solutions are not able to adapt to market changes and get outdated quickly.
The success of Banks will be based on an Agility strategy. Agency Banking software must enable an evolution of agent channel by phases, meaning that it must allow to add new features as the alternative channel grows and gains weight within the organization.
Therefore, it is concluded that the choice of a flexible and secure Agency Banking platform is definitely the best way to prepare for change.