In the last feature, we spoke about the foundation of Agency Banking and its importance in advancing financial inclusion on a global level.
Financial institutions the world over have realized that the lack of sufficient service points in remote and rural markets and high investments in creating and maintaining new branches and ATM infrastructure are prohibitive, especially considering the high-volume, low-value transactions, specific for such markets.
These are some of the challenges which a local trusted agent network could meet, aiding financial organizations in their successful outreach endeavors.
However, the picture is not as rosy as it seems.
Here is a ‘Point Of View’ from our global alliances expert, Chirag, who has travelled across countries to get the pulse of Agency Banking, the agents, their challenges and their success stories. Read on…
A local banking correspondent or an agent is in effect, bringing the rural consumer closer to the mainstream finance, giving him/ her, a fair chance at equal opportunities for growth and prosperity. On the other hand, the consumer is entrusting their confidential information, their identity and their hard earned money in the hands of these agents. Thus we can safely conclude that these agents are not just making a transaction of money or financial services, but in fact they are transacting ‘Trust’.
And what do they get in return, you may ask?
In form of a meager commission, they get a chance at an additional income, some form of respect within their community, in case of a small business or shop owner, it gives them a chance to reach out to a larger audience and cross-promote banking as well as their own products. But is all this enough?
There are many challenges and risks that these agents face on a day-to-day basis for them to consider agency banking as a lucrative form of income and making it a full time profession to run their own families and expect personal growth.
Including risk of customer data leakage, system failures, risk of frauds in some cases, agents’ liquidity issues and security there are many other challenges that hinder agents from optimizing their potential and truly becoming the ‘Agents of change’.
In order for banks and governments to reach the financial services to the grass roots, ‘Empowering’ these ‘Agents’ will then be the key to grow the ‘Agency Banking’ structure and make it more lucrative a profession to attract more and more agents into this channel and thereby reach more and more customers. Let’s take a look at the steps needed for this platform to be a win-win situation for both banks as well as the agents:
- Knowledge about the financial products and services
To begin with, ‘Agents’ need to be well-versed in the various services their financial institution offers, restrictions, fees, and key selling points, along with their requirements. This helps agents adhere to regulatory norms, reduce fraud and expedite successful customer applications.
Agents should also know what and when new products are expected to soon be available in order to help promote them. As they are usually a point of contact for customers, their knowledge needs to be both current and accurate in order to handle customer queries.
- Technology Platform and Troubleshooting:
Technology is at the core of electronic/mobile-banking operations, and agents are expected to understand at least the basics so they can troubleshoot common errors. This is important since most agents are located in remote places and it is time-consuming and costly for a technician to visit them and resolve technology issues.
- Considerable gains to serve as a lucrative business:
A robust Compensation Structure is an important aspect that will help the stickiness of the agent and also avoid fluctuation from one bank to another. Agents need to understand their compensation and incentives, as well as how their remuneration is calculated and credited. They should also know how to make money as agents, since many in rural areas do not have any precedents or learnings for them to follow. Since revenues and profits are too often skipped over, or insufficiently explained, in their training, some agents lose interest or even quit.
Having taken care of these issues, Agency Banking can prove to be the most revolutionary tool for financial inclusion and growth platform for rural areas of our times.
For people involved in the ‘business of trust’, the least that can be done is not tag them as mere ‘agents’ rather equip them with enough knowledge and empower them with technologically led tools and introduce them as financial advisors with ability to not just deal in payments and transactions, but also build wealth and create wealth creation and risk management opportunities through cross selling financial services like micro finance, insurance, loans, etc.
It is not an easy ride ahead, and many would have tried and failed. But it’s no time to call it quits. With right tools and a right mindset, we are on a mission to ‘Techpower the world’ one agent at a time.
Come join us on this journey as we innovate, co-create and converge our skills and resources to build an inclusive and equal world for all. To know more connect with us at info@evolute.in or visit us here.
– By
Chirag Bhandari, Global Alliances
Team Evolute
