Rationale For Banking Agents
Banking agents help financial institutions to divert existing customers from crowded branches providing a “complementary”, often more convenient channel. Other financial institutions, especially in developing markets, use agents to reach an “additional” client segment or geography. Reaching poor clients in rural areas is often prohibitively expensive for financial institutions since transaction numbers and volumes do not cover the cost of a branch. In such environments banking agents that piggy back on existing retail infrastructure – and lower set up and running cost - can play a vital role in offering many low-income people their first-time access to a range of financial services. Also, low-income clients often feel more comfortable banking at their local store than walking into a marble branch.
Banking agents are the backbone of mobile banking, i.e., performing transactions over a mobile device, most often a mobile phone. To enable clients to convert cash into electronic money and vice versa which can send be sent over their mobile phone, clients will have to visit a branch, automated teller machine (ATM), or banking agent. Especially in remote and rural locations, where cash is still the most important way to pay and transact, a mobile banking service is dependent on banking agents to enable clients to effectively use the service.
| For clients | |
|---|---|
| Lower transaction cost (closer to client’s home; client would visit store anyway for groceries, etc.), Longer opening hours, Shorter lines than in branches, More accessible for illiterates and the very poor who might feel intimidated in branches. | |
| For agents | |
| Increased sales from additional foot-traffic, Differentiation from other businesses, Reputation from affiliation with well-known financial institution, Additional revenue from commissions and incentives. | |
| For financial institutions | |
| Increased customer base and market share, Increased coverage with low-cost solution in areas with potentially less number and volume of transactions, Increased revenue from additional investment, interest, and fee income, Improved indirect branch productivity by reducing congestion | |
Read more about this topic: Banking Agent
Famous quotes containing the words banking and/or agents:
“One of the reforms to be carried out during the incoming administration is a change in our monetary and banking laws, so as to secure greater elasticity in the forms of currency available for trade and to prevent the limitations of law from operating to increase the embarrassment of a financial panic.”
—William Howard Taft (1857–1930)
“Modern man’s capacity for destruction is quixotic evidence of humanity’s capacity for reconstruction. The powerful technological agents we have unleashed against the environment include many of the agents we require for its reconstruction.”
—George F. Will (b. 1941)