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Deepening financial inclusion through agent banking

March 27, 2013

Enhancing Financial Innovation & Access (EFInA) hosted their Innovation Forum titled “Deepening Financial Inclusion through Agent Banking”.The event was attended by Deposit Money Banks, Microfinance Banks, Mobile Money Operators, Mobile Network Operators Industry Regulators, Agent Network Organisations, among others.

With a growing emphasis on agent banking to provide financial services to customers, as evidenced in countries like Brazil, Columbia, and Pakistan, EFInA recognizes the huge potential for agent banking to significantly increase access to a range of financial services, including savings, payments, transfers and insurance for the unbanked and under-banked population. The key objectives of the Forum were to share ideas on how to ensure that agent banking successfully deepens financial inclusion in Nigeria, through a clear understanding of the Central Bank of Nigeria’s agent banking regulations and peer learning.

Speaking at the Forum, Ms. Modupe Ladipo, Chief Executive Officer, EFInA, stated that agent banking is one of EFInA’s key strategic areas to support its overall objective of promoting financial inclusion in Nigeria. Ms. Ladipo further stated that, “Proximity to a bank is the top criteria for choosing a bank for the banked and one of the top three barriers to having a bank account for the unbanked. All adults are aware of their nearest provision shop, 80% are aware of their nearest mobile phone kiosk compared with 63% and 26% who are aware of their nearest Deposit Money Bank and Microfinance Bank respectively. The distance to provision shops and mobile phone kiosks is also significantly shorter that the distance to banks. Therefore, agent banking has an important role to play in reaching the unbanked and underbanked by bringing financial services closer to the customer.”

The keynote speaker, Mr. Dipo Fatokun, Director, Banking and Payment Systems at the Central Bank of Nigeria (CBN) spoke on the importance of fully understanding the CBN’s guidelines for the ‘Regulation of Agent Banking and Agent Banking Relationships in Nigeria’. He presented the key aspects of guidelines stating that,“Agent banking is an additional delivery channel that can enhance the convenience and outreach of quality and affordable financial services particularly to the underserved in a more cost-efficient manner. Successful agent banking deployments all over the world have demonstrated that an effective agent network facilitates financial inclusion. Agents, who may be individuals, small retail shops, post offices, or large retailers, can offer customers a convenient and affordable way to conduct a range of financial transactions. The Guidelines outline the minimum expectations required for Financial Institutions intending to undertake agent banking.”

The guest speaker at the event was Mr. Frederik Eijkman, the Founding Director of PEP Intermedius in Kenya. PEP Intermedius is a network of agents which works with a number of renowned and reliable partners in mobile money and retail banking in Kenya, including M-PESA, Airtel Money, KCB, Equity Bank and Orange Money, and manages over 170 agents (both owned and franchised) moving over $750,000 daily. Mr. Eijkman stated that, “An effective agent acquisition strategy is critical to the success of agent banking. Agent management (including having the appropriate commission and incentive structure), liquidity management and having a robust transaction platform are also critical. In Kenya, PEP-owned agents are visited by a supervisor daily to ensure thatthey are effectively managing their floats.”

As a conclusion to the Forum, participants were asked to consider the biggest challenges in terms of deploying agent networks on a large scale in Nigeria. Ms. Ladipo’s closing remarks were that, “Addressing these challenges is vital to ensuring the success of agent banking in Nigeria.”


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