The banks are about to go after mobile money with Agency banking

If you think that the banks are comfortable with the telecoms eating their lunch money, then you are terribly mistaken. These dinosaur-moving financial institutions are about to re-invent themselves in way that makes them operate lean, fast and everywhere with what’s being called Agency banking. And that’s largely a good thing because the long-awaited customer care, fast response time and close proximity to banking services you have been longing for is here — even in your village.

Agency banking is a new regulation which licenses financial institutions to empower an agent to provide special financial services on their behalf outside the conventional avenues of good old-school banking hall with tellers, banking managers and ATMs. Ideally it’s like a mobile money agent but this time, you deposit and withdraw from your bank account, not your mobile money account on your phone.

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Bank of Uganda has already passed regulations that will govern agent banking. In fact, some banks on the cutting edge like Centenary bank have already started training their agents on how to conduct business on their behalf. With a customer base of about 1.4 million customers, the bank is about to bring their services closer to their customers across the country.

“I am confident that Agent Banking will further increase our reach to customers, and enable them to conveniently access our affordable products and services, anywhere, anytime without the need to visit a Centenary Bank branch.” Mr. Fabian Kasi of Centenary bank said during the Agent Banking meeting.

So how will agency banking work?

Banks have been taking notes from the fast-moving telecoms. So, there’s a striking similarity on how agency banking and mobile money kiosks work. Taking the case of Centenary bank, according to their Facebook page, Cente Agents will be trained and availed with a POS terminal or cell phone. The Agent will then be equipped with skills necessary to provide banking services according to the standards set by the bank in order to help the customer access fast, convenient and affordable banking.

Centenary Bank Supervisor Financial Inclusion, Dan Aleeni showing the participants how Agent Banking will work. ~ Centenary Facebook Page

The services to be offered by the #CenteAgent include;

• Cash Withdrawal
• Funds transfer
• Cash Deposit
• Collection of documents.
• Bill Payment.
• Balance inquiry
• Mini Statement
• Any other service permissible by Bank of Uganda
• Account opening initiation.

What banks are up against

But it won’t be a rosy smooth ride for the banks. The telecoms invested a lot in marketing efforts as well as recruiting and training agents as they gain trust from the end users. Currently there are more than 50,000 mobile money agents in Uganda. Mobile banking is a no-brainier. You just walk to a mobile money kiosk which are no more than 1 km away in urban areas and transact without any worries.

Banks have to go through the same rough ride. First they have to recruit and train as many agents as possible while complying with BOU agency banking regulations. And then agents must always have enough “float” on their account so as to enable users withdraw or deposit funds. Mobile money agents particularly are facing this challenge. I can’t count how many agents I have visited only to be bounced because of shortage of float on the agent’s account. In fact, you’ll be luck to withdraw or deposit more than Ugx 500,000 with any mobile money agent in town.

Banks have to improve on their very terrible customer care or customer relations management. Mobile money agents are generally known to be more friendly and less uptight than traditional banker tellers. So users will expect the same friendliness from bank agents.

Lastly the banks have to up their Technology stack. We know this is particularly their Achilles’ heel, but if they hope to go against Telecoms who naturally are Tech-driven, then there won’t be space for sloppiness. System uptime has to be more than 95% which is equivalent to what the Telecoms maintain if banks hope to succeed.

Agency banking is no doubt the last chance for banks to redeem themselves in an ever competitive and increasingly dynamic financial market place. With just about 5 million bank account holders compared to 19 million mobile money subscribers, banks are up against an incumbent that’s agile,  big, technologically superior and is already well established and trusted by the masses.