THE AGENT BANKING & DIGITAL FINANCIAL SERVICES

CONFERENCE – 14 JULY 2016

TOPIC

Incentives to Lower Cost of Service, tap into informal sector and access remote rural areas, through Leveraging on Agency Banking

This paper will analyse the impact of Agency Banking in the informal sector and rural areas as a low cost digital channel as opposed to the use of traditional structures i.e. bank branches. Focus will be on what the Financial Institutions have done and challenges they are facing in providing Agency Banking services to these segments.

DEFINITION

Agency Banking refers to the provision of a specified range of financial services to customers on behalf of a registered banking institution by a contracted Agent.

Such Agents include Retail Outlets, Clothing Stores, Food Outlets, Pharmacies, Hospitals, Schools, Service Stations etc.

INTRODUCTION1. Agency Banking has helped other countries like Kenya, South Africa, Latin America etc boost their financial inclusion strategies

2. The informal sector participate in economic development

3. Agency Banking is 2 years old in Zimbabwe and currently 5 banks are involved

SERVICES OFFERED

1. Opening of low cost accounts2. Cash deposits and withdrawals3. Balance enquiry 4. Generation and issuance of Mini statements.

5. Sell of pre-paid electricity

6. Internal Funds Transfers7. DSTV subscriptions8. Bill payments (Utilities, taxes, rates,

subscriptions)

WHAT FINANCIAL INSTITUTIONS HAVE DONE TO PENETRATE REMOTE AREAS

1. Since the introduction of agency banking financial institutions have set up more than 3 000 operational agents throughout the country.

2. Opening of over 200 000 low cost accounts.3. Development of innovative low cost products for

the low income segment.4. Development of digital delivery channels in rural

areas.

WHAT FINANCIAL INSTITUTIONS HAVE DONE TO PENETRATE THE REMOTE AREAS (CONT’D)

5. Improving financial literacy among the targeted group.

6. Advertising on behalf of the agents through different channels namely print, digital, radio etc.

INCENTIVES TO LOWER COST OF SERVICE, TAP INTO INFORMAL SECTOR & ACCESS REMOTE AREAS

1. Bringing the products and services at the customers’ door steps and reduce transport costs.2. Using agents who are familiar to the customers3. Reduced know your customer requirements,

only IDs are required when opening the accounts

4. Lower transaction costs and zero minimum balances

5. Promotions

BENEFITS TO CUSTOMERS

1. Lower transaction and transport costs.2. Longer opening hours (compared to banks).3. No queues than in bank branches.4. Bank at the customer’s door step.

BENEFITS TO CUSTOMERS (CONT’D)

5. One-stop shop for banking and other services

6. Easier access to the Bank by the less literate and the very poor customers who would otherwise feel intimidated to visit bank branches.

BENEFITS TO AGENTS

1. Increased sales from additional banking services and foot traffic.

2. Differentiation from other businesses.3. Reputation from affiliation with well-known

financial institutions.4. Additional revenue from commissions and

incentives.5. Diversification.6. Opportunity to leverage and sweat the existing

infrastructure.

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BENEFITS TO FINANCIAL INSTITUTIONS

1. Increased customer base and market share.2. Increased coverage with low-cost solutions.3. Increased revenue from additional services.4. Improved service through decongestion of

branches.5. Easy expansion at lower costs.

CHALLENGES

Despite the numerous gains of Agency Banking, herewith an outline of challenges faced.

1. High costs of infrastructure. E.g. POS machines, laptops. We appeal to the government to consider reducing duty on such equipment.

CHALLENGES (CONT’D)

2. Some remote areas have poor or no connectivity.

3. Current cash shortages4. Lack of a national digital database on which banks

can ride for KYC details such as proof of residence, photos and employment history.

WHAT CBZ BANK HAS DONE

• Mobilised more than 100 thousand low cost accounts.

• Opened more that 120 Agency Banking Agents and an additional 105 Zesa Agents.

• Launched Mobile App where both customers and non-customers can open wallets. Such wallets will enable the customers to carry out financial transactions like funds transfers, making bill payments among other functions. L

CONCLUSION

WE ENCOURAGE ALL RELEVANT STAKEHOLDERS TO SUPPORT THE EXPANSION OF AGENCY BANKING

AND OTHER FINANCIAL INSTITUTIONS TO PARTICIPATE.

THANK YOU