Agent Banking: Up-Scaling Outreach For Increased Profitability And Impact Presented by DIPO FATOKUN Director, Banking and Payments System Department Central Bank of Nigeria, Abuja at the
Agent Banking: Up-Scaling Outreach For Increased Profitability And Impact
Director, Banking and Payments System Department
Central Bank of Nigeria, Abuja
D-8 Workshop on Microfinance for SMEs & 7th Annual Micro, SMEs Finance Conference, held at Transcorp Hilton, Abuja
• Definitions of Agent Banking
What is Agent banking ?
In Malaysia, agent banking initiative has already produced promising results. Three financial institutions, namely Malayan Banking Berhad, RHB Bank Berhad and Bank Simpanan Nasional have a combined agent network of 4,120 agents as at end-December 2012, which includes post offices, petrol stations, retail outlets and telecommunication agents. Compared with branches, financial institutions reported that agent banking channels delivered cost savings in terms of set-up costs of more than 80%, while agents have also benefitted from the increased customer flow to their business premises.
Source: Central Bank of Brazil, MIDAS, SBS, CNBV, 2010
Studies have shown that increasing the area covered by agents within the country has had the effects of increasing the reach of the financial services to the people, thus raising the levels of financial inclusion.
Other aspects of the document include:
An agent shall not:
i. Operate or carry out any transaction when there is communication failure with the FI.
ii. Carry out a transaction where a receipt or acknowledgement cannot be generated.
iii. Charge the customer any fee.
iv. Give any guarantee.
v. Offer banking services on its own accord.
VI. Continue with the agency business when it has a proven criminal record involving
fraud, dishonesty, integrity or any other financial impropriety.
vii. Provide, render or hold itself out to be providing or rendering any banking service which
is not specifically permitted in the contract.
viii. Open accounts, grant loans or carry out any appraisal function for purposes of opening
an account or granting of a loan or any other facility except as may be permitted by any
other written law to which the agent is subject.
ix. Undertake cheque deposit and encashment of cheques.
x. Transact in foreign currency.
xi. Provide cash advances.
xii. Be run or managed by an FI’s employee or its associate.
xiii. Sub-contract another entity to carry out agent banking on its behalf except where there
is a super-agent structure in place.
xiv. FI may in the contract document specify other activities, which the agent is prohibited
Benefits to a customer
Benefits to the Agent/ Agent Network Provider
Benefits to the Financial Institution
Benefits to Mobile Money Operators(MMO)
Benefits to the Government
The Key Success Factors For Agent Banking rest heavily with the agents at the customer frontline
Credibility: The agent has to be a trusted brand, or member of the community
Proximity: Agent networks have to be easily accessible by the customer
Consistency: Offer similar customer experience regardless of location
Security: As the main interface with the customer, agents have to ensure compliance not only with KYC as required by CBN regulator but with all fraud prevention processes. As such agents will be responsible to ensure that their counter staff have the appropriate levels of training
Simplicity: Agents are the main human interface –it is their responsibility to explain the service, guide the user, and make the service simple and accessible
Liquidity: Customer experience is critical to the success of this venture…it is imperative that customers have immediate access to their cash. Agents will have to ensure minimum liquidity levels
With every new system, there are bound to be challenges. Some of the major obstacles are mentioned below. However, it is worthy to note that CBN with the other stakeholders are working towards surmounting the challenges: