The benefits of agency banking in emerging markets

By Soumaya Hamzaoui, Chief Commercial Officer, RedCloud Technologies Emerging markets present a challenge for traditional banks looking to expand their operations. Vast non-urban regions often lack the legacy infrastructure to enable fast deployment of financial product and services, and the cost of entering these remote areas can seem prohibitive. The benefits of agency banking are such that banks can extend their reach without ‘breaking the bank’. Given that more than 80% of the adult population in sub-Saharan Africa’s developing regions are unbanked, there is a definite opportunity, and need, for banks to use agents and reach the financially excluded.

What is agency banking?

Agency banking has the means to penetrate underserved areas, increasing the access to, and availability of, financial products and services without having to invest in ‘bricks and mortar’ bank branch infrastructure. It allows humans to act as ATMs, delivering financial services using devices such as card readers, point-of-sale (POS) terminals or mobile phones to process real-time transactions. These agents can offer banking services such as registering customers, taking deposits, dispensing withdrawals, funding transfers, processing payments (e.g. utility bills) and providing mobile phone airtime top-ups.

Telcos are already leading the charge here: the GMSA reports that there are 10x more registered agents than bank branches in 37 of the world’s mobile money markets. The full potential of the benefits of agency banking is still being tested but its success depends largely on its technological backbone. To compete with the telcos, banks need to invest in innovative technology that enables them to push out new products via their agents quickly, in response to ever-changing market needs.

Empowering technology

Agent Cloud is a RedCloud platform dedicated to providing agents with digital solutions to better support their customers. The Cloud works across multiple agent set-ups, from high-street dealers to fully-fledged bank branches, and provides an easy configuration and distribution of financial products and services. It’s an intuitive, flexible technology that offers banks the very best opportunity to grow their networks in geographically challenged areas.

With the right technology on their side, agency banking has the power to become more than just a cash withdrawal or deposit system. Working as ‘proxy banks, agents will be able to sell specialised products and services to customers in outlying areas, providing individuals and small businesses with the finance they need to stimulate growth.

For the banks the benefits of agency banking are clear: scaling their business and winning back important market share from telcos.