If you lived in a suburban area in an African country like Nigeria a decade ago, you may recall how strenuous it was to visit the bank. People in the rural areas suffered the inconvenience of traveling to the nearest town with a bank to open a bank account and send or receive money.
This happened because there only were bank branches at central locations, usually in the bigger cities, where everyone visited to carry out their transactions. After all, there was no alternative solution.
The alternative came up with the evolution of information and communications technologies (ICT) that enabled Financial Institutions to create a new Alternative Delivery Channel (ADC).
Defining Agency Banking
Agency Banking is a strategy in the Financial Industry that uses authorized Agents to deliver financial services to customers in remote areas and beyond the reach of the traditional branch network. This was the best way that Banks found to serve consumers in rural areas, especially in emerging markets, since the construction of branches in peripheral and poor areas involves costs that are too high compared to the expected return.
Hence, Agency Banking is a type of Branchless Banking that has become a huge opportunity, in developing markets, for Banks to grow their reach and customer base efficiently and at low costs. Banks can now extend their activity to rural areas more quickly and serve unbanked and underserved communities. For this reason, Agency Banking has a positive impact on Financial Inclusion, as it allows populations in rural areas to access essential financial services.
The model of Agency Banking, as the name suggests, uses Agent Networks to deliver financial services. Agent Networks represent a very flexible and easily expandable distribution model to new areas at low operational costs. But besides being a cost-efficient channel, Agents guarantee the security and compliance of the service.
Consumers in rural areas have difficulties in using technologies, so it is not enough to provide solutions such as net banking to them. Agents have a very important role in customer assistance: they help in explaining banking products, in the digital processes of registration and onboarding of services and in the verification of identity for security purposes.
How does Agency Banking work?
Agency Banking is part of the channel-mix as an alternative distribution channel. However, due to the last-mile context, it has its own characteristics that make its management a major challenge for Banks.
Therefore, choosing an Agency Banking software that matches the demands of this channel is a critical step to its success.
Before any service provider embarks on a branchless banking model, they must ensure that they have a robust system that can integrate with an agency banking solution like Waynbo to create a seamless banking experience for its consumers.
Existing Agent Networks with field Agents in different communities register with the Bank to provide services on their behalf.
They are vetted, regulated and trained before they are authorized or permitted to partner with the organization.
There are different sorts of Agents: moving Agents (with no fixed location), merchants and small shop owners.
In some cases, Banks also have employees in the field, and manage them as part of the Agent Network. Waynbo platform makes it easy to manage different teams and categories of Agents. It allows you to organize groups and teams by permissions, skills or characteristics.
Who are the primary participants?
Banks / Other Financial Institutions (OFIs)
They are the service providers that give structure to the system. They host the financial services that the agents can provide to the consumers. It is also required that all field agents have an account with them to transact on their behalf.
OFIs are organizations that operate within money and capital markets comprise of mortgage banks, occupied with lending funds or money such as leasing, and credit financing institutions.
Also known as field agents are responsible for processing customers’ requests. They earn per transaction based on an agreement with their network managers or the service providers. Some often charge an additional amount for cash-in cash-out (CICO) services rendered.
Usually operated by an Agent Network Manager, they oversee the activities of the agents, float management, marketing, branding, etc. On Waynbo, they can see the geo-location of each agent in real-time.
Advantages of Agency Banking
It provides banking services to the unbanked and underbanked in rural communities, by literally taking the banks to the end-users. It prioritizes the needs and comfort of the client as they serve as an infrastructure for economic empowerment of the unbanked and underserved.
2. Reduced cost of operations
It is cheaper and saves the cost of establishing a physical traditional bank. With agency banking, financial institutions can spend less, save more and focus on building a robust system that can be seamlessly integrated with agency banking software and platforms like Waynbo.
3. Increased customer acquisition
Agents acquire more customers for the financial institutions or telcos due to their accessibility to the consumers.
4. Increased product penetration
Due to its accessibility, it is easier for people to want to try out these services, thereby exposing them to a range of digital products and services provided by different service providers. The agents who undergo training on how to use the platforms and render services are also advancing their financial and digital literacy. On Waynbo app, we have a dashboard containing resources to assist the agents while they work in the field.
Agency Banking is revolutionizing the Banking Industry in emerging markets. It is creating opportunities for thousands of people and making financial services accessible to the unbanked and underbanked population.
Leveraging Agent Networks in use cases where the customers do not open bank accounts and adding more financial services to make it more valuable are opportunities that need to be expanded on.
On Waynbo, we can white-label your product and customize it to your organizational goals and needs.
Contact us to book a demo now!