28 NEW VISION, Thursday, February 4, 2016 BUSINESS AND TENDERS NEW VISION, Thursday, February 4, 2016 29 BANKS GEAR UP FOR AGENCY BANKING, URGED ON RISK MEASURES By Faridah Kulabako accounts shared among only four players — MTN, Airtel, Uganda Telecom and Africell. anks have been waiting In addition to The growth in the mobile money sector, which for the opportunity to was introduced in Uganda in 2009, is attributed broaden their service reaching the to the massive uptake of mobile phones, delivery channels to the estimated at 24 million, and the convenience and millions of unbanked affordability of mobile money services, compared Ugandans using cheaper unbanked masses, to traditional banks services. and more convenient The mobile money platform, according to avenues. agency banks the FinScope III Uganda Unlocking Barriers to BIt is, therefore, not surprising that Financial Inclusion report, increased access to although the newly passed law allowing formal fi nancial services from 24% in 2009 to Agent Banking still awaits the President’s are also expected 54% in 2013. assent to take effect, many banks are already putting fi nal touches to their to increase Success in Kenya and Brazil strategies for the roll-out. It should be noted that some countries, including Agent banking allows banks to recruit Kenya and Brazil, have implemented successful other businesses to offer selected employment branchless banking. banking services on their behalf. This Introduced in May 2010, Kenya is treading way, banks can have representation in opportunities across ahead of other African countries in agency areas not previously commercially viable. Equity Bank boss James Mwangi banking, with about 24,645 agents being used by Dennis Kawuma, the head of marketing 14 Kenyan banks. and corporate communication at United the country. “We have been investing in the systems, waiting Since 2010, agents are said to have conducted Bank for Africa (UBA), says the bank is for this moment. We have also drawn lessons from about 93 million transactions valued at Ksh500b developing plans on how to use the new countries where this type of banking has been (16.9 trillion), with Equity Bank leading the game. model to serve the market effectively. development of the fi nancial sector. applied over the years and I am confi dent that we In Brazil, the number of agents was estimated Mathias Katamba, the chief executive An agent would receive deposits, offer shall navigate this area very well,” Katamba said. at 400,000 as of December 2013, with the agents offi cer of Housing Finance Bank, says cash withdrawals and sell other bank Equity Bank, on the other hand, intends to estimated to have handled about 7% of all bank they are also waiting for the green light products, effectively pushing up the replicate the stringent procedure used in Kenya transactions during the period, according to the to roll-out the new banking model. fi nancial instutions’ clientelle without it to license agents so as to ensure safety and Central Bank of Brazil. He says it will help players to expand establishing a physical branch, which is success of the model, according to Mwangi. To succeed, the two countries put in place into previously untapped territories cheap. Analysts believe that if implemented effi ciently, tough regulations for Agent Banking. Kenya, for as it eliminates the need for physical But also, it is expected to increase Agency Banking has the potential to signifi cantly instance, specifi es that the bank is responsible branches that are too expensive. employment opportunities across the increase fi nancial access by the underserved for determining the services that any particular “We have been waiting for this moment country. population to a range of fi nancial services, agent should provide, based on an assessment as it will give us leverage to diversify In her paper, How Agent Banking thereby boosting fi nancial inclusion and growing of risks. delivery channels and increase fi nancial Changes the Economics of Small the industry’s deposits. Brazil, on the other hand, requires agents inclusion,” Katamba said. Accounts, Clara Veniard of the Bill & Although there are about 25 banks in the dealing with credit and leasing to be trained and He also noted that the model will help Melinda Gates Foundation, notes that country, available data from Bank of Uganda certifi ed on relevant technical matters, applicable boost fi nancial inclusion and lower the agent banking systems are up to three shows that there are just about 6 million bank regulations, the consumer protection code, ethics, cost of fi nancial services to foster greater times cheaper to operate than branches. accounts, compared to 19.5 million mobile money and ombudsman duties. A customer gets served at a Supermarket. Agency Banking will allow banks to recruit other businesses like supermarkets and mobile money to offer banking services on their behalf This, according to her, is because of the bank’s for originality. customer service. reduced need to invest in new infrastructure and Technological risks, on the other hand, may Liquidity related problems may also lead to LET THE NEWS FIND YOU the lower acquisition costs for mobile-enabled include software or hardware failures resulting agents losing clients to competitors. Some countries, agents and mobile wallets. into a lack of service availability and information @ 10,000/= only By using mobile phones, instead of payment loss. The legal and compliance risks may include Managing risks including Kenya and WHEREVER, WHENEVER cards, she states that customers can be acquired customers suing a bank as a result of agent theft A year after it was introduced in Kenya, Mwangi at less than 70% of the cost of a branch or point or an agent’s violation of privacy laws or misuse was quoted by Kenyan media saying the model Brazil, have successfully of sale-enabled agent. of confi dential customer data. faced a number of challenges, including agents’ The Equity Bank Group chief executive offi cer, For instance, some agents may disclose lack of capacity to handle large transactions of James Mwangi, recently said the institution is set customer information to third parties without cash and some banks not spending enough on implemented Agent Trendy way to find a to roll out agency banking in Uganda as soon as knowledge that the bank owes its customers the security measures. partner the Bill is enacted into law. duty of confi dentiality, and a breach of which Abubaker B. Mayanja, an economist, says Equity Bank is the lead agency banking player could lead to customers taking legal action banks intending to use agents should harmonise Banking. in Kenya. against the bank. their mobile money platforms with those of their Customer service could also be a huge agents to facilitate instant transfer of deposits fi nancial inclusion,” Kasi said. Analysts take challenge for the banks as they need to train and from the agent into a bank account. The experts also concur that intending banks Although Agent Banking will take access points retrain the agents so as to maintain high levels of This, he notes, will enable banks to mitigate should invest in the security of agents and also within closer reach for the unbanked population, traditional risks associated with the safety of take up insurance coverage for unforeseen analysts say banks need to be careful while depositors’ cash, which could be lost through occurrences. implementing the new model to avoid falling theft or fraud. Kaboyo also notes that the range and prey to risks which could jeopardise it if not The model could see increased complexity of services provided by agents Gossip & executed prudently. collaboration between requires increased attention on the part of the updates Stephen Kaboyo, a banking industry expert, banks’ mobile bank while licensing and supervising agents advises that banks intending to adopt it should network because, ultimately, it is responsible for its put in place risk mitigating measures so as to win operators agent’s actions. public trust, right from the start. to facilitate The banking industry, he says, should sensitise “It is important to build confi dence from the growth. the public on the new model to create awareness Your favourite start and demonstrate that Agency Banking is Centenary because most people are not conversant with columnists secure, effi cient and a modern way of banking, Bank managing the concept. He says deliberate interventions to photography & so that all banks intending to use the director Fabian empower the target market are needed. All your news model can have effective risk mitigating Kasi recently In one place video coverage measures in place,” Kaboyo says. said banks Similar models in Uganda from Katende Agency Banking is associated with will continue James Abola, the team leader for Akamai Global, Muhammad a number of risks, which can be collaborating a business and fi nance consulting fi rm, says Photography operational, technological, legal and with telecoms even without the law, some banks have been compliance or reputational. on the mobile operating a similar model. They are Opportunity Vision Group Operational risks may include agent money platform Bank and Post Bank. Equity Bank, Kenya will Download the fraud, charging unauthorised fees by to further enhance fi nd it easy to roll it out in its Uganda, branch. Store app and get all the news an agent, loss of customer records and convenience in The rest will need to invest in systems and at your finger tips. Bride & Groom Magazine Uganda data