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	Agents Overview: Branchless Banking Agents Agent Business Case Agent Network Managers Branchless Banking Supply Chain Economics Structuring an Agent Network Managing Agents

The Business Case

In any distribution channel strategy, the business model needs to work for all parties involved. Otherwise the model is not sustainable and either the contract will need to be renegotiated or one of the parties will not have adequate incentive to continue developing the channel. Indeed, in the early days of agent networks in Brazil, the system suffered from very high agent turnover attributable at least in part to the unrealistic expectations many agents had about the profit the agent business would generate.

The agent:

Revenues

Set up cost

Running cost

• Additional sales through increased foot traffic

• Commission per transaction (fixed and/or variable)

• Incentives based on e.g., volume of transactions, new customers, etc.

• Salary cost for training

• Use of store space for device and marketing material

• Salary for staff conducting transactions

• Salary for staff and transport cost to deposit/withdraw excess/lack of cash at branch

• Opportunity cost of holding sufficient account balances with bank to offset transactions (zero if bank extends interest-free credit line)

• Communications cost of POS (zero if paid by bank)

The bank:

Revenues

Set up cost

Running cost

• Interest rate income from loans

• Investment income from deposits

• Commission from utility companies (depending on country)

• Commissions charged to banks using the same agents (in a multi-bank agent environment)

• Organizational adjustment (new department, training, product development, system integration)

• Agent set up (Selection, Training, technology set up)

• Client acquisition (marketing, card cost)

• Back-end processing cost

• Staff time to monitor and manage agents

• Technical- and 24-hour emergency service

• Commissions paid per transactions to agent

• Agent incentives

• Communication cost

Rather than developing expertise on the selecting, training, monitoring agents and growing the network - not a core activity for a financial institution—most banks choose to outsource agent management to network acquirers. These are service companies who provide everything from just the technology platform, to a full “plug and play” package, including agent selection and contracting (whether directly or on behalf of the bank), agent installations and training, marketing support for the outlets, and handling legal disputes in case something goes wrong.