Agents are the front line of any branchless banking service and provide a bridge for customers between cash and e-money. They play a critical role in finding, acquiring and educating new customers, enabling them to transact, and keeping them satisfied.
More and more financial institutions (and occasionally nonbank financial service providers) around the world—from Brazil to Mali, and India to the Philippines—are using agents to distribute financial services. Over 140 branchless banking operations are live worldwide; and nearly all of them rely on agents as the main way to sign up and service customers. For example, Bradesco—a Brazilian bank—operates one of the world’s largest agent networks, with 24,500 locations nationwide. In 2010, bank agents in Brazil handled 3.1 billion transactions (6% of all bank transactions), 2.85 billion of which involved the movement of funds. In Kenya, M-PESA’s 16 million customers are served by a country-wide network of almost 30,000 agents.
While there is no single formula to building a viable network of branchless banking agents, certain key elements have become clear. For one thing, as the human front line to any branchless banking service, agents must not only comply with Know-Your-Customer (KYC) standards set by regulators, but also help guard the entire system against fraud, encouraging customers' trust in the service. In addition, branchless banking services must provide customers with access to cash when they need it. Therefore, agents play a critical role in liquidity management by keeping adequate stocks of both cash and e-money to enable clients to transact. And as the first point of contact, agents help bridge the gap between a high-tech service and low-literacy clients.
However, the use of agents can trigger operational, technological, legal/compliance, reputational, and other risks. The traditional branchless banking model is evolving, with regulation assuming a central role in enabling—and sometimes limiting—its spread. CGAP has produced publicly available materials and toolkits on several critical issues related to agent management and regulation to help providers develop viable agent distribution channels. Such channels both serve the poor and simultaneously protect consumers and the integrity of financial services.
Topic Contact: Claudia McKay
- Designing and Implementing Agent Networks (Microsave)
- Bridges to Cash: The retail end of M-PESA (Bill & Melinda Gates Foundation)
- Three Keys to M-PESA's Success: Branding, Channel Management and Pricing (Bill & Melinda Gates Foundation)
- Building, Incentivising and Managing a Network of Mobile Money Agents: A Handbook for Mobile Network Operators (GSMA)