Agency Banking Solution: Expansion Opportunities, New-Age Trends

Agency banking, as the name suggests, refers to using non-banking agents, retailers, companies, or even individuals through whom consumers can avail of banking services on behalf of a financial institution. Many customers are asking for more convenient and individualized banking services due to the growing use of mobile banking and?digital banking platforms . Banks may address this need by offering customers access to financial services in places and ways that are more convenient for them, thanks to agency banking.

Along with providing all the banking services, agency banking solutions are pivotal in reducing bank costs and increasing revenue. Therefore, growing areas such as Bangladesh have pioneered agency banking solutions and the country uses it to promote more financial inclusion. Infact, according to a study by the Gates Foundation on the?Global Findex Report 2021 , financial services have increased by 50% in Bangladesh during the past ten years. bringing on new consumers who were previously out of their reach, agency banking solutions assist banks in growing their customer base without making significant investments in physical bank branches, infrastructure, or labor expenditures.

The retail agents gain since they can increase their income through several means, including sales from increased foot traffic. Due to their affiliation with reputable banks, retail agents can set themselves apart from rivals in this way. Finally, customers from rural areas who were previously underbanked or unbanked can easily access a financial institution without traveling great distances.?

This blog will examine the opportunities and trends in agency banking and suggest how banks should seize these chances to adapt to changing consumer needs and stay competitive.

What is the Need for Agency Banking Solutions?

The leading cause of this was the difficulties the conventional banking system faced.

High Cost of Operation and Setup

Traditional banks are tough to establish everywhere. However, if the bank tried to do it, the setup and operating expenses would be so enormous that it would be a loss-making project for them. Since agency banking has relieved the banks of this responsibility, they can now offer their services wherever they want.

Limited Capacity for Scaling

The services of traditional banks could not be offered in places with no banks. Before the residents of that region could visit the bank, there was no method to accomplish that. Thus, banks should have included more consumers due to limited scalability.

Reduced Profitability

Once online banking became available, companies could serve clients already familiar with traditional banking and had bank accounts—just in an online format. So, only these clients contributed to their profit.

With the introduction of agency banking services, banking services are now available everywhere, and with more consumers comes a logical outcome of more profit.

Lack of?Agility

Traditional banks must be more adaptable and agile when responding to change and accommodating consumer requirements and preferences.

On the other hand, traditional banks may rapidly and successfully reach more customers, particularly those living in distant and underserved areas, by making several services available for agency banking.

What is the Current Situation in Agency Banking?

A financial institution's employment of agents to deliver financial services on its behalf is known as agency banking. It is a method of extending financial services to regions that standard banking systems underserve.

There are agency banking success stories from across the world. For instance, the M-Pesa mobile money network has established itself as a popular and reliable way to conduct financial transactions in Kenya.

As a result, agency banking has the potential to completely alter how banking services are provided, particularly in developing nations. It is crucial to watch the current situation of agency banking and the potential and difficulties it brings as the financial landscape changes.

Opportunities in Agency Banking

With the ever-expanding paradigm of?agency banking for better financial inclusion , there are massive opportunities. Below is a list of possibilities that make agency banking solutions enticing:

Banking the Unbanked

Banks can increase their customer service and reach using an agency banking system. Services, including account opening, deposits, withdrawals, and loan disbursements, fall under this category. Banks can get clients needing access to conventional banking channels by offering these services through non-bank intermediaries like merchants or telecommunications firms.

Better Revenue Potential for Banks

Banks benefit from additional sources of income thanks to agency banking. For instance, by collaborating with non-bank agents like stores, banks can use their current networks to offer other services like remittances or insurance.

In addition, commissions on transactions completed through agency banking channels might bring in money for banks.

Saving Infrastructure Costs

By using already-existing infrastructure and partnerships, agency banking can also assist banks in cutting expenses. But it is necessary to understand the required?steps to build an agency banking network . For instance, a bank can offer banking services through the networks of retailers or telecommunications providers already in place, which can help to cut the cost of establishing and operating physical branches.

By obtaining banking services through non-bank agents, such as stores, which may be more convenient and accessible than traditional banking channels, customers can also benefit from cost savings.

Leading Trends in Agency Banking

To keep up with the pace of agency banking solutions, businesses must have information about the changing trends. We present a detailed list of trends impacting agency banking solutions’ transformation.

Focus on Compliance and Regulatory Requirements

The focus on compliance and regulatory requirements is growing as agency banking becomes more prevalent. Banks must ensure that they are in accordance with all applicable laws and that their non-bank agents are doing the same.

This may involve ensuring that customers' private information is safeguarded and that all transactions are accurately recorded and reported.

More Personalized Banking Services

Customers are asking for more convenient and individualized banking services. By giving customers access to financial services through unconventional channels like merchants or telecommunications providers, agency banking can assist in meeting this need.

Additionally, users can readily access these services from anywhere because of the growing usage of technology, which may contribute to greater financial inclusion. Therefore, it will not be inaccurate to suggest that agency banking will be an advanced option for your company if you fully understand it.

Better Technology, Better Reach

Many clients are asking for more convenient and customized financial services due to the expanding usage of technology. By granting customers access to financial services via online portals or mobile banking apps, agency banking enables banks to meet this demand.

Services, including account opening, deposits, withdrawals, and loan disbursements, fall under this category. Additionally, users may readily access these services from any location because of the growing popularity of digital platforms, which may contribute to a rise in financial inclusion.

Coordination Between Banks and Telecom Companies

Banks are increasingly collaborating with non-traditional partners, including shops and telecommunications firms, to deliver agency banking services.

Examples of this include partnerships with retailers, phone providers, and other corporations with established networks and clientele. These alliances help extend the reach of financial services, boost revenue sources, and cut expenses.

Adopt Our Agency Banking Solutions for Banks, FIs

With its most dependable and practical agency banking solution, Panamax enables banks to quickly grow their client base and make banking services available to customers regardless of location.

Branchless banking will be made accessible to all customers in unbanked or underserved areas by simplifying it. If you are a bank or financial institution,?schedule a free demo ?with our expert team and expand your banking or financial services nationwide. Allow us to comprehend your needs and provide you with our specialized assistance.

This blog is originally published on Panamax Inc.