Research & Analysis

Bank Agents: Risk Management, Mitigation, and Supervision

In countries across the globe, banks are increasingly using agents to provide financial services to customers. In Brazil, for example, banks use approximately 160,000 agents--many with multiple outlets--to provide financial services to all 5,564 Brazilian municipalities. In 2010, bank agents in Brazil handled 3.1 billion transactions (6 percent of all bank transactions), 2.85 billion of which involved the movement of funds. In Pakistan, there are approximately 17,500 bank agents. In the quarter ended September 2011, these agents handled 15.88 million transactions totaling Rs 58,710 million (US$674 million) with an average transaction amount of Rs 2,700 (US$42.53). These arrangements, which involve the use of both agents and technology to transmit transactions details, are often referred to as "branchless banking."

The use of bank agents has the potential to significantly increase financial access by poor and underserved populations to a range of formal financial services, including savings, payments and transfers, and insurance. In particular, agents can offer customers a convenient and affordable opportunity to cash-in and cash-out of an electronic payments system.