The document discusses agency banking partnerships, highlighting their benefits such as cost efficiency and increased customer reach, while also addressing potential weaknesses like control over agent behavior and the necessity for effective partner management. Various successful models from around the world are presented, including examples from Brazil, the Philippines, and Pakistan, showcasing how agency banking can enhance financial inclusion. Overall, the session emphasizes the importance of collaboration with diverse intermediaries to scale banking services effectively.

1. Agency Partnerships
Collaboration with MNOs & Other Intermediaries for Banking Services
Discussion slides for an interactive session on Agency Banking and service
partnerships.
13 November 2012
Dan Armstrong
dan.armstrong@takashimobile.com
+31 652 085 071

2. Agency Partnership Business Rationale
Strengths Opportunities
• Lower cost than building traditional bank • Tendency to leave money in bank account,
branches, hiring fixed employees with easier access / more locations
• Commission-based costs supports scaling • Combined behaviour (banking & agency
Agency network, variable financial case location activity) can increase number of
• Helps lower queues in bank halls banking moments, joint activities
• Can support retailer / SME banking business • Support card usage (if using POS)
line • Can generate new bill payment revenues (incl.
• Can be used to sell business accounts, taxes, school fees) in some markets
allowing salary disbursal for employees • Can increase customer base (more locations)
Weaknesses Threats
• Lack of real control of agent behaviour, cash • Bank reputational risk if things go wrong
control • Partner management / CIT key to Agency
• Less chance of real interaction with customers, Banking success, often requires branch
up-sell/cross-sell support to ensure Agencies are supported
• Requires a “partner management” programme correctly
/ systems / people • Will consumers accept this in some countries?
• Requires careful management of float,
collection accounts, etc.
Distribution Conference 11/2012 – Dan Armstrong – page 2

3. Agency Banking Partner Types
 Retailers (chain, independent)
 Insurance Outlets
 Post Offices
 Lottery Outlets
 Mobile Network Dealers
 Pharmacies
 Customers
 etc.
Distribution Conference 11/2012 – Dan Armstrong – page 3

4. Scope of Potential Agency Banking Partnership
Bank Employees @ Agency Employees
Agency Employees Non-Employees,
Branded Retailer / @ Un-Branded
@ Branded Retailer Un-Branded,
Other Location Retailer / Other
/ Other Location Independent
(Mini Branch/Stand) Location
(Mini Branch/Stand) Operators
(Cashier/Stand)
• Expansion of the • Popular in the late 1990s • Most commonplace type • Usually independent airtime
traditional postal bank and early 2000s with the of Agency Banking dealers, one-man
model for banking US Post Office, with “co- relationship enterprises
• “Shop-in-Shop” concept managed” employees (on • Usually cash-in/cash-out, • Usually no fixed location
has proven successful in the grocery stores payroll, balance checking, bill infrastructure, but regular
trusted retail locations, but also reporting to a payments place to be
post offices, etc. postal manager) • Sometimes combination • Don‟t normally have a
• Can provide a wide range • NL TNT Post has closed w/card acquiring business business license or
of banking services, most post offices and (enabled payment with legitimate tax regime.
account sign-up, loan implemented “branded” cash-back too) • Cash management support
booking, etc. retailer locations • Additional services can be critical to assess.
• Requires more investment brought by the location
than simple transactions (DSA, truck banking, etc.)
Distribution Conference 11/2012 – Dan Armstrong – page 4

5. Agency Banking World-Wide
Distribution Conference 11/2012 – Dan Armstrong – page 5

6. Brazil
 Brazil is probably the most developed market where banking
agents have significantly increased financial system
infrastructure.
 74 institutions are currently managing around 105,000 points of
sale that reach all 5,561 municipalities. The Brazilian
correspondent banking locations are over 60% 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.
Distribution Conference 11/2012 – Dan Armstrong – page 6

7. Sicredi Total
 Sicredi Total s a “correspondent banking”
programme currently running at 2.346
retailers, pharmacies, etc.
 Enables direct debit authorisations, basic
banking services, mobile/internet banking
and bill payments in an Agency Banking
model.
 Core services: water and electricity bills,
telephone bills and bloquetos.
Distribution Conference 11/2012 – Dan Armstrong – page 7

8. FINCA Express (DRC)
 FINCA, international microfinance group, is
moving strongly into alternative channels
since 2012.
 Primarily Agents for loan repayments, but
includes withdrawals and savings too
(savings launching in Tanzania and Zambia
soon).
 Pilot in 23 locations in Kinshasa and other
locations in the Democratic Republic of
Congo.
 FINCA pays for all transactions, pays Agent a
monthly retainer and per-transaction fees.
 A good example of the many Agency
networks around the world focusing on loan
repayments.
Distribution Conference 11/2012 – Dan Armstrong – page 8

9. Vision Banco Ñande Bank - Network of Correspondents (PY)
 Capabilities: Loan Applications & Repayments,
Credit Card Collection, Collection Services,
Deposits & Withdrawals, Balance Inquiries, Cash
Advances, Remittances (soon).
 Transactions are 100% free for all customers
 Requirements:
• Must be a commercial establishment open to the
public
• Must have a good reputation, experience and
service attitude
• Must be recognized representative in the community
or sector
• Must have credibility with customers
• Must have adequate conditions / physical space for
the location of a cash box and a customer queuing
capability
 Any results or input from Banco Regional?
Distribution Conference 11/2012 – Dan Armstrong – page 9

10. PEP Intermedius (KE) & EKO/- (IN) – agency aggregators
 These companies aggregate services and
float in a formal manner with owned or
franchised locations.
 PEP Intermedius
• Network of cash merchants Agency aggregator
for MPESA, Airtel Money, KCB Mtaani, Yu
Mobile (Essar Telecom), Orange Money
• Aggregated float, 36 own agents & 140
franchise agents
• Also in all 29 Kenyan Nakumaats
 EKO/-
• Banking and Money Transfers, Payments,
SimpliBank Platform and Cash Management
(CIT).
• EKO/- agents provide services for State Bank
of India, Yes Bank, ICICI Bank.
Distribution Conference 11/2012 – Dan Armstrong – page 10

11. Smart HAPINOY & MicroVentures (PH)
 SMART Hapinoy (launched in 2007) is an
interesting paradigm wherein they‟ve
created an M-PESA-like (strong branding)
and allowed all sorts of small shop-owners
(“sari-sari” stores) to take part.
 Microfinance funding for store development
is included.
 Hapinoy is functioning as a prepaid
airtime sales tool, money remittance and
payments mechanism (SMART Money)
and provides direct loans to customers –
with MFI partner MicroVentures Inc.
 ~20.000 “micro-entrepreneurs” using
Hapinoy across The Philippines and joining
the follow-up “Path to Prosperity”
programme designed to increase all
member‟s sales volumes to USD 10.000
per month.
Distribution Conference 11/2012 – Dan Armstrong – page 11

12. Zanaco Xpress & Zampost (ZA)
 In addition to their Bank POS programme,
Zanaco has established a partnership with
ZamPost for Bank POS at 121 post office
locations and 9 independent retailers (130 ZamPost
locations in total).
 Services during the pilot:
• Balance Inquiry
• Deposit
• Withdrawal
 Dedicated central team, with regional
support in the branches.
 Some cash management issues with
individual ZamPost locations.
Distribution Conference 11/2012 – Dan Armstrong – page 12

13. Australian Post
 Provides banking services on behalf of
70+ banks/financial institutions at 3.200
outlets.
 Deposits, withdrawals, account balance
inquiries, bill payments, etc. No fees for
any of these services.
 “Bank@Post” partnership with Rural Bank
for account opening.
 All-services payment concept with
remittances, prepaid VISA, PostPay
online e-commerce product (pay on
delivery) & Pay it @ Post (accepting cash
for online payments) in combination with
SecurePay (online payment product).
Distribution Conference 11/2012 – Dan Armstrong – page 13

14. Banks & Post Offices in Supermarkets (US)
 The US has been working with these
collaborative models for years.
 Primarily “shop-in-shop” models for services,
leveraging large retailers (Walmart, K Mart) or
super markets.
 Some examples:
• Post Office ()
• Banks ()
• Mobile Network Operators ()
• Health Care / Medical Check-Ups ()
• Opticians ()
• Coffee / Food Services () – however, often
“retailer-owned”
• Pharmacy () – could be “retailer-owned”,
depending on the U.S. state
 Some services (like post office) in retailers are
being phased out based on lack of
traffic/customers. Source: Rabo Development research
Distribution Conference 11/2012 – Dan Armstrong – page 14

15. United Bank Ltd. “Omni” Branchless Banking (PK)
 Pakistan‟s popular United Bank Ltd. “Omni”
Branchless Banking program, the bank will be available
in full-service “kiosks” (for the 580+ plus Omni locations
in Pakistani “Dukaans”) at partner locations.
 Only CNIC number and mobile phone number are
requirements, with the mobile phone number
becoming the bank account number.
 For UBL Omni, the link between mobile phone number
and bank account has also helped support the
penetration of financial services „down the pyramid‟ to
individuals who would not normally choose to access
financial services, who cannot afford card-based
banking product or who do not live anywhere near a
traditional bank branch.
 Major support for UBL Omni doing disaster relief
dispersal during the last round of floods.
 Non-UBL Omni customers can also make utility and
postpaid phone payments, send/receive funds, and buy
prepaid airtime at UBL Omni Dukaans.
Distribution Conference 11/2012 – Dan Armstrong – page 15