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Agency banking

Agency banking

​​Agency banking: Learning papers explore pricing, technology preparedness


>> Paper 1: Agency Banking Pricing: Decisions along evolution

>> Paper 2: Agency Banking Technology: Boon or bummer​ 

>> Learn more: Scale2Save >> See related v​ideo


​BRUSSELS, 14 May 2020 – WSBI's Scale2Save programme programme released today two new learning papers that explore pricing around agency banking. Written by Scale2Save Local Technical Specialist Kimathi Githachuri​, the papers cover two specific areas of agent banking: pricing and technology costs.


​Agency banking pricing: Decisions along evolution

​The first paper, titled Agency Banking Pricing: Decisions along evolution focuses on how pricing strategies have been applied by banks in trying to create viable agency banking services in West Africa, and to what extent distribution management plays a core value proposition for customers. The analysis contained in this paper helps frame some of the debate swirling on social media during past year on digital financial services (DFS) channels in Kenya – the birthplace of the hugely popular M-PESA mobile money service.  

The paper includes a case study on FCMB Nigeria, a top-tier retail bank​. The study delves into FCMB's 'EasyClub' for farmers in the north of the country.​ The paper also explores EasyClub pricing strategies to motivate deeper agent network distribution, which remains crucial to greater access and use by farmers. 

Across the different geographies, from the east to the west of Africa, it is evident some common pricing strategies could potentially be employed, with of course variations to suit the local conditions. A set of learnings provided, if applied, may help shape strategic design, particularly at the beginning of the agency banking network roll out​. One finding explains that customers would rather pay for trustworthy services readily available and reliable to them. They will shun cheaper service with lower distribution footprint or less reliability. 

 


Video: 
Postbank in Kenya, a Scale2Save partner, explains role agent banks play in connecting people in villages with mainstream banking.​




Read the papers:

​​>> Paper 1: Agency Banking Pricing: Decisions along evolution

>> Paper 2: Agency Banking Technology: Boon or bummer​ ​​

>> Learn more: Scale2Save 
​​​

Agency Banking Pricing: Boon or bummer

The second paper, titled Agency Banking Technology: Boon or bummer​, ​​looks at how technology application has proven to be the challenge that has served both as a boost and a bummer, in equal measure, during the financial inclusion journey of the last 10 years.​ 

To explain both, the paper provides a case study on microfinance institution Advans in Ivory Coast​ to argue that it may be possible, and in fact quite common, not to find a technology solution that fits a local situation. An institution's existing technology service providers, which have already acquired client knowledge, may have know-how on agency and/or digital banking solutions. That said, the author advises banks to look first at the greater service provider market to find out if a workable solution exists that can potentially be tailored to an instiution's situation, meanwhile avoiding being a "Guinea pig" for a service provider.

Another finding shows cost of acquiring technology solutions invariably affects thro​​ughput price of service to customers, as the institution may want to recover whole or parts of the associated costs of the technology. That means ensuring the pricing structure agreed upon factors this in. Githachuri​ also notes the value in seriously considering shared agency banking solutions instead of cost duplications on a solution. Easily shared bilaterally or between multiple financial institutions to not only share initial costs, but also distributing future development costs.

Scale2Save; Financial inclusion; Agent banking; Innovation; Digitalisation