Bank agents offering account opening services decreases by 70%

The percentage of agents who offer account opening services has decreased by about 70% since 2015 according to Financial services Agents Survey 2020 report by Enhancing Financial Innovation & Access (EFInA).

Agent banking is the provision of financial services to customers by a third party (agent) on behalf of a licensed deposit taking financial institution and/or mobile money operator (principal).

This speaks to gaps in product development and financial inclusion efforts. Financial Service Providers (FSPs) are encouraged to offer more incentives to agents to drive account opening and push financial inclusion from commercially viable business models.

Account opening/registration dropped by 19 in 2020 from 51 percent in 2017 and 68 percent in 2017, the report stated.

Over the same period, the percentage of agents who offer Cash-In-Out (CICO) transactions has increased significantly.

Consequently, cash-out (cash withdrawal) rose from 57 percent in 2015 and 74 percent in 2017 to 95 percent in 2020.

Account opening, institutional registration, bill payments and balance enquiry top the list of sought-after transactions by customers although not commonly offered by agents.

Agents choose principals based on some critical business model considerations, including remuneration, platform reliability, bestowed trust and level of convenience attributed to access.

Agents surveyed by EFInA are signed up by different principals/service providers. Nevertheless, First Bank (First Monie), OPay, QuickTeller, and MTN top the list of principals with a majority share of agents.

Agents mostly operate from business centres and kiosks. Point-of-Sales (POS) and Smartphones are the most used delivery channels for running the business.

Opportunity to make additional income is the major motivation for becoming an agent. Others are anticipated marketing activities from principals, increased footfall for pre-existing business and customer request.

Banking agents increased by 220 percent from 83,560 in December 2018 to 267,627 as at 29 February 2020, according to Shared Agent Network Expansion Facility (SANEF) as published by the Central Bank.

Investigation shows that number of agents is more than the stated figure as more agents are opening up across the streets with no umbrella body to monitor their activities.

The rising number of banking agents springing up across every street corner is seen as a good development for the economy but monitoring and regulating them becomes a challenge, stakeholders said on Monday.

Olusegun Akintunde, financial market analyst at Polaris Bank Limited, said “it’s through that the banking agents are on the increase because banks have realised that is the only way to bank the un banked.

However, he said they belong to a body called SANEF. They are also registered by banks and thus regulated by CBN through banks.

Liquidity management has continued to be a huge problem for agents. The report shows that 6 out of 10 agents run out of cash usually weekly. FSPs should explore partnerships that will support agents’ liquidity management, EFInA recommended.

“There is need for better alignment in support provided by principals, as the study result shows a mismatch between what is needed and what is provided,” the report said.