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Banks embrace agency banking in new cost-cutting moves

Financial institutions are embracing operations that require minimal investments to achieve more results. Agency banking stands out as a cost-effective model helping commercial banks reach the unbanked and underbanked.

To be successful in this venture, the participating banks must deploy the right technology and digital channels that make banking services seamless, writes COLLINS NWEZE.

It is a win-win situation for banks and their customers when banking services are brought closer to the grassroots.

That explains why financial service providers, government and policy makers, regulators have been making efforts at global, sub- regional and national levels to increase access of excluded populations to finance. And one of the shortest routes to achieving this is agency banking.

The banking model, which the Central Bank of Nigeria (CBN) and banks, have been promoting is cheap, easy to embrace and attracts low cost to serve. Agency banking takes financial services to customers through a third party (agent) on behalf of a licensed deposit taking financial institution and/or mobile money operator.

It, however, requires the deployment of the right technology to achieve desired results.There are about 307,000 Point of Sale (Pos) machines in Nigeria, 30,000 Automated Teller Machines, and over 6,000 bank branches, but only 167,000 of the PoS are active and agency banking helps to bridge the gap.

The objective of agency banking is to, through the various agent channels, enhance financial inclusion, make financial services delivery channel efficient and take banking to the grassroots.

A sole agent does not delegate powers to others, owns outlets and conducts banking transactions on behalf of banks using a configured channels. The super agents are payment facilitators while the sub-agents handle tasks assigned to them by the super agents.

According to the apex bank, commercial banks have continued to embrace agency banking to improve their customer base and support their cost-saving strategies.

For instance, within its first 100 days, Polaris Bank’s agency banking initiative, SurePadi, served over half a million customers impacting an estimated two million households across the seven business regions of the bank nationwide.

Its Chief Digital Officer (CDO), Dele Adeyinka, explained that, in the first 100 days of introducing SurePadi, it had done over 500,000 deals, and that transaction was above N10 billion, servicing over two million households, giving them easy access to cash for businesses and family needs.

Adeyinka said: “As a result of this milestone, SurePadi was ranked fifth in Q1, 2020 by the Shared Agent Network Expansion Facility (SANEF) report—an indication that it is bridging the gap and helping people to meet their needs of accessing funds; as well as sending money to their loved ones.”

Access Closa provides access to financial services right within the neighbourhoods. Access Bank’s agents process transactions quickly and easily via platforms such as PoS terminals or mobile phones, helping customers to carry out transactions without visiting a branch.

Speaking at one of the Access Bank’s ‘Compliance Engagements with Agents’ in Lagos, its Deputy Group Managing Director, Roosevelt Ogbonna, said the bank is, through agency banking, setting standards for sustainable banking practices and delivering value to customers.

He lauded the agents for believing and partnering the bank, adding that the lender will also ensure that the business relationship remains mutually benefiting.

Ogbonna described the agents as credible partners who will continue to support the lender in realising its financial inclusion target.

Despite the benefits that come with agency banking, operators are expected to follow the rules. The agents are not allowed to carry out any transaction when there is communication failure with the financial institution or where a receipt or acknowledgement cannot be generated.

Also, the agents are not allowed to charge the customer any fee, give any guarantee, offer banking services.

They are not to continue with the agency business when it has a proven criminal record involving fraud, dishonesty, integrity or any other financial impropriety.

They are not to provide, render or hold itself out to be providing or rendering any banking service, which is not specifically permitted in the contract.

Also, they are not to undertake cheque deposit and enactment of cheques, transact in foreign currency, provide cash advances and be run or managed by an financial institution’s employee or its associate.

She noted that families abroad who wish to send money home to help with fees can do so at zero charges on the Rapidtransfer app. The bank has also provided the Banking-for-School pack for educational institutions to access working capital and loans.

The features of this pack include easy fee collections, zero charges on collection accounts with EcobankPay, secure online banking with Omni Lite and cards for easy payments.

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