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deposit a certain amount of cash into that account which will serve as the banking agent's “working capital.” In many cases, rather than asking the agent to come up with the cash deposit, the financial institution will extend the store a credit line. The size of the credit line is normally not standardized, but adapted individually to each agent depending on its size, the expected volume of transactions and how long the agent has already been working with the bank. This is how the credit line will be used during each transaction:
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clients in rural areas is often prohibitively expensive for financial institutions since transaction numbers and volumes do not cover the cost of a branch. In such environments banking agents that piggy back on existing retail infrastructure – and lower set up and running cost - can play a vital role in offering many low-income people their first-time access to a range of financial services. Also, low-income clients often feel more comfortable banking at their local store than walking into a marble branch.
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facilitated 12.4m new bank accounts and today the network comprises 56 percent of all points of sale in the
Brazilian financial system. Financial institutions in other Latin-American markets such as Peru, Colombia, and Mexico have started to learn from the Brazilian experience, adjusted their regulation, and established their own banking agent networks. Pioneers in other regions can be found in Kenya, Mongolia, South Africa, and the Philippines.
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Brazil is probably the most developed market where banking agents have significantly increased financial system infrastructure. Seventy-four institutions are currently managing around 105,000 points of sale in Brazil that reach all 5,561 municipalities. Within only 5 years, the banking agent network
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For the client, there is no difference in accessing his or her bank account at the agent or in a branch or at an ATM. However, besides signing a contract with the financial institution it will be working for, the banking agent also has to open a bank account at the same. In addition, the store has to
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When transaction volumes are relatively low, a banking agent's staff may process banking transactions in addition to their normal sales. The banking equipment is located behind the store's general cashier. Posters and marketing material may be limited to a small display next to the EFTPOS terminal
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Local regulation will determine if financial institutions are allowed to work through retail outlets. Regulators generally determine what kind of, if any, financial institutions are permitted to contract banking agents, what products can be offered at the retail outlets, how financial institutions
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Banking agents help financial institutions to divert existing customers from crowded branches providing a “complementary”, often more convenient channel. Other financial institutions, especially in developing markets, use agents to reach an “additional” client segment or geography. Reaching poor
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or their mobile phone to access their bank account or e-wallet respectively. Identification of customers is normally done through a PIN, but could also involve biometrics. With regard to the transaction verification, authorization, and settlement platform, banking agents are similar to any other
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is a retail or postal outlet contracted by a financial institution or a mobile network operator to process clients’ transactions. Rather than a branch teller, it is the owner or an employee of the retail outlet who conducts the transaction and lets clients deposit, withdraw, transfer funds, pay
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Latin
America is the region with the strongest development towards banking agents. Here governments concerned about expanding financial sector infrastructure have adjusted regulation and are providing incentives for banks to reach new geographies and new client segments through banking agents.
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Increased customer base and market share; Increased coverage and penetration with low-cost solution in areas with potentially less number and volume of transactions; increased revenue from additional investment, interest, and fee income; improved indirect branch productivity by reducing
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A banking agent may set up a dedicated store which is similar to a mini-branch, i.e., a small shop with around 1-3 tellers, but transactions are processed by non-bank staff. in most cases, the store will be branded by the bank to actually win the trust of the rural dwellers.
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If transaction volumes justify it, a banking agent may set up a stand within a store with dedicated staff. Some financial institutions prefer this set up since clients do not feel as much as “banking” in a store and the bank's brand is much more visible.
604:
Diniz, Eduardo H.; Martin Jayo; Tania P. Christopoulos. 2009. Monitoring and evaluating microfinance delivery through ICT-based correspondent banking. Proceedings of 3rd
European Conference on Information Management and Evaluation, Gothenburg:ECIME.
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Lower transaction cost (closer to client’s home; clients will still visit convenience stores for groceries, etc.); longer opening hours, shorter lines than in branches; more accessible for illiterates and the very poor who might feel intimidated in
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In case the agent's credit line had reached its limits, and the agent's bank account does not have sufficient funds, to cover the received funds, the POS will block and can only be deblocked if the funds have been deposited in the next bank account.
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Pioneering banks, microfinance institutions, and mobile operators started to experiment with banking agent networks in various countries around the world such as Brazil, Peru, Colombia, Kenya, Mexico, Pakistan, the
Philippines, and South Africa.
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Diniz, Eduardo H.; Marlei
Pozzebon; Martin Jayo. 2008. Banking Technology to Scale Microfinance: The Case of Correspondent Banking In Brazil. In Proceedings of ICIS 2008 (International Conference on Information Systems): 144. Paris, France.
100:, i.e., performing transactions over a mobile device, most often a mobile phone. To enable clients to convert cash into electronic money and vice versa which can then be sent over their mobile phone, clients will have to visit a branch,
596:
Diniz, Eduardo H. ; Jayo, M. ; Pozzebon, M. 2007. Correspondent banking as microcredit delivery channel. In: Chicago
Microfinance Conference, 2007, Chicago. Proceedings of the Chicago Microfinance Conference. Chicago, USA.
104:, or banking agent. Especially in remote and rural locations, where cash is still the most important way to pay and transact, a mobile banking service is dependent on banking agents to enable clients to effectively use the services.
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their bills, inquire about an account balance, or receive government benefits or a direct deposit from their employer. Banking agents can be pharmacies, supermarkets, convenience stores, lottery outlets, post offices, and more.
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For more on the regulatory aspect on banking agent networks, please read CGAP. “Use of Agents in
Branchless Banking for the Poor: Rewards, Risks, and Regulation.” CGAP Focus Note No. 38. CGAP: Washington DC.
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Increased sales from additional foot-traffic, Differentiation from other businesses, Reputation from affiliation with well-known financial institution, Additional revenue from commissions and incentives.
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The agent selects the type of transaction on the POS device or personal computer, enters the amount, swipes the client's card through the device, and lets the client enter his PIN;
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Ivatury, G. and
Timothy Lyman. Use of Agents in Branchless Banking for the Poor: Rewards, Risks, and Regulation. CGAP Focus Note No. 38. Washington D.C.: October 2006
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Globally, these retailers and post offices are increasingly utilized as important distribution channels for financial institutions. The points of service range from
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An existing bank client presents his card at the agent and requests a specific transaction and the amount to be withdrawn, deposited, or transferred;
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615:
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Ivatury, Gautam. Using
Technology to Build Inclusive Financial Systems. CGAP Focus Note No. 32. Washington D.C.: January 2006
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uses corner stores to provide financial services, to small lottery outlets in Brazil at which clients can receive their
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in the
Outback of Australia where clients from all banks can conduct their transactions, to rural France where the bank
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There are principally three ways that banks can set up their equipment and marketing material within a store:
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Retailers as Financial Services Providers: The Potential and Pitfalls of This Burgeoning Distribution Channel
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625:. Documento Asobancaria No. 3. AsociaciĂłn Bancaria Y de Entidades Financieras de Colombia: Bogota. 2006
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55:(POS) card reader, mobile phone, barcode scanner to scan bills for bill payment transactions,
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Client withdraws money (“cash-out” transaction): agent account is credited in same amount.
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Client deposits money (“cash-in” transaction): agent account is debited in same amount.
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Expanding Bank Outreach through Retail Partnerships: Correspondent Banking in Brazil
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Once the transaction has been authorized, the device prints the client's receipt.
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The transaction process for banking services using a bank card is simple:
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Links to financial institutions operating banking agents around the world
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World Bank Working Paper No. 85. The World Bank: Washington DC. 2006
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or other data connection. Clients that transact at the agent use a
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For more information on Colombia's banking agents, please visit:
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632:. The Center for Financial Innovation: Chicago, Illinois. 2005.
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490:"RBI permits corporations to work as rural agents of banks"
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Banking agents are usually equipped with a combination of
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Cashier set up: Lemon Bank agent in small shop in Brazil
554:"Co-operative Bank of Kenya • Agency Banking services"
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251:Stand set up: Banagrario banking agent in Colombia
63:(PCs) that connect with the bank's server using a
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268:Store set up: Lemon Bank agent with own store
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239:and a small sign outside the store.
208:General Packet Radio Service (GPRS)
96:Banking agents are the backbone of
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376:www.bancadelasoportunidades.gov.co
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20:Banking agent serving customer in
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48:and access their bank accounts.
84:, and other operational areas.
76:have to handle cash transport,
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277:Experience with banking agents
102:automated teller machine (ATM)
57:personal identification number
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401:Eko India Financial Services
391:Eko India Financial Services
88:Rationale for banking agents
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10:
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134:For financial institutions
108:Benefits of banking agents
59:(PIN) pads, and sometimes
621:Prieto Ariza, Ana Maria.
460:Cooperative Bank of Kenya
450:Equity Bank Kenya Limited
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515:ke.equitybankgroup.com
455:KCB Bank Kenya Limited
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623:Internet Banking Tips
614:Kumar, Anjali et al.
499:. September 29, 2010.
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218:Banking agent set ups
72:remote bank channel.
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497:Wall Street Journal
387:State Bank of India
176:Transaction process
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82:consumer protection
69:magstripe bank card
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78:know your customer
61:personal computers
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556:. Archived from
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531:. Archived from
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364:Banco de Bogota
334:Banco Santander
329:Banco de Estado
317:Caixa Economica
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260:Dedicated store
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46:social payments
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562:. Retrieved
558:the original
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537:. Retrieved
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38:post offices
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352:Bancolombia
113:For clients
639:Categories
564:2017-02-22
539:2017-02-22
466:References
438:Scotiabank
397:ICICI Bank
369:Davivienda
346:Banagrario
140:congestion
124:For agents
432:Interbank
340:Colombia:
119:branches.
645:Banking
414:Banamex
226:Cashier
511:"Home"
408:Mexico
299:Brazil
444:Kenya
381:India
323:Chile
243:Stand
22:Kenya
495:Mint
479:2006
420:Peru
358:BBVA
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206:A
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