CGAP Releases Agent Management Toolkit

Branchless banking is in a state of creative chaos. The impressive growth of a few pioneers like M-PESA in Kenya has demonstrated the potential, yet most providers are still pushing to achieve success in their own market.

We suspect a big part of the problem is located in the supply chain: by this, we mean agents. At its core, branchless banking is about having cash when and where customers want it: agents are the crucial link for cash conversion. Agents also verify client identity and protect against fraud. Agents are also literally the face of the service when clients have a problem that needs resolution.

CGAP’s Agent Management Toolkit aims to demystify the process of building a viable agent network. The toolkit is based on more than a year of research that yielded data on more than 16,000 agents with institutions in Brazil (Banco do Brasil and Banco Postal), India (EKO and FINO), and Kenya (M-PESA). CGAP conducted in-depth, in-person interviews with 466 agents, agent network managers and providers.

Here are a few highlights:

• Even the most successful branchless banking services have not yet proven the long-term business case for agents. In Kenya, smaller stores that comprise the bulk of M-PESA’s 21,000 agents saw their profits go down from more than US$ 5/day to less than US$ 4/day, largely due to growth in the number of agents outstripping growth in the number of transactions processed in the system. The ratio of transactions to agents is one of the 9 drivers of agent profitability discussed in the toolkit.
• Agent network managers (ANMs) are an oft-overlooked link in the supply chain. CGAP talked to a dozen to understand their business case. Increasingly, ANMs like EKO and FINO – and not banks or MNOs – are at the center of conceptualizing a branchless banking service and driving it to success.
• The branchless banking service must generate sufficient revenue to support all of the companies in the supply chain: the majority of services do not meet this test (yet). The toolkit includes a detailed analysis of the financials of M-PESA (Kenya) and an excel financial model readers can use to test their own business case.
• Too many providers leap straight to the operational nuts and bolts. Only after pinning down the supply chain economics should a provider dive into identifying, selecting and managing agents. Part 2 tackles these topics and the annexes include examples of contracts, commission structures, and other useful documents.

Over the next 2 weeks, CGAP’s Technology Program Blog will host a series of 4 blog posts detailing each of these points. Check back often, and in the meantime download the toolkit in its entirety, the financial model or browse the first sections of the toolkit whose highlights are on the website: 1) Overview of Branchless Banking Agents and 2) the Agent Business Case.