Agents

Overview: Branchless Banking Agents

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. Agents are the crucial link for having cash when and where customers demand it. Agents verify client identity and protect against fraud. Agents are also quite literally the face of the service when clients have a problem that needs resolution. In short, agents are a critical component of a successful branchless banking initiative.

CGAP has worked extensively on the topic, and we gather together many of our outputs here. 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 a change in the ratio of transactions to agents.
• Agent network managers (ANMs) are an oft-overlooked link in the supply chain. 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 a 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 of the toolkit tackles these topics and the annexes include examples of contracts, commission structures, and other useful documents.

The toolkit can be downloaded in its entirety, along with the EXCEL-based financial model. Users can also access each of the five sections individually: (1) agent business case; (2) agent network managers; (3) branchless banking supply chain economics; (4) structuring an agent network; (5) managing agents. 

Also available are three powerpoint decks with detailed findings from CGAP’s research on agents in Brazil, India, and Kenya. Much of our thinking on agents comes out first through the Technology Program blog.

Throughout the toolkit, we refer to branchless banking as a supply chain and it may be useful to start with some basic Definitions of the Branchless Banking Supply Chain.