Women’s World Banking offers lessons for creating a successful agency banking network

Women’s World Banking team with Diamond Bank, NBS Bank, NMB and trainers from Helix Institute of Digital Finance visiting a banking agent.

Agency banking has expanded the opportunities for banks to offer financial services to customers. Banks’ points of service are no longer limited to branches or ATMs. Deposits and withdrawals are now available at local shops, markets and even post offices. A whole segment of unreached clients, especially women who often face the most acute barriers to formal financial services, are now potential customers.

In this changing landscape, how do banks create a sustainable agent network? To answer this question, Women’s World Banking brought together three of our partner banks—Diamond Bank from Nigeria, NBS Bank from Malawi, and National Microfinance Bank (NMB) in Tanzania—for four days of training in Dar es Salaam, Tanzania and to share their experiences in building agent networks.

All three institutions are developing agent networks with particular attention to serving women clients. They are designing financial products that are secure and safely managed through mobile technology between the agent and the client. NBS Bank, for example, is working with Women’s World Banking, with support from UNCDF’s Microlead program, to roll out Pafupi Savings. This savings account relies on an agent network to reduce the barriers to accessing financial services, such as distance and cost, for clients in rural areas, especially women.

We would like to share a few of the key lessons from this exchange with our fellow members and friends of the Better Than Cash Alliance:

Lesson 1: Building relationships with agents lays the foundation of a successful agent network.

A bank’s success depends on providing quality service to its customers. As ambassadors of the bank, it is particular important for agents to have convenient and friendly interactions with customers. Banks also need to be aware of customer complaints and problems that agents experience in order to prevent jeopardizing the institution’s credibility. One participant in the training shared the experience of an agent network manager who goes through customer complaints every morning to decide which agents he should visit throughout the day. He greets each agent in person before working with them to the solve problem, recognizing the value of face-to-face interaction and relationship-building both internally and externally.

Service quality in agent networks is determined during recruitment, training and ongoing monitoring of their performance. Banks can take direct responsibility for these functions or leverage the strength of partnerships with mobile network operators or aggregators to reach scale more quickly. No matter how they organize the roles, however, banks should build their own capacity to monitor agents directly and not rely exclusively on partners. As training participants learned, to make these partnerships work, it is critical for a bank to gain an understanding of activities on the ground and oversee quality of service.

Once banks have built strong relationships with their agents and customers, even if recruitment, training and monitoring are outsourced, they will experience strong retention and loyalty.

Lesson 2: Be transparent and foster open communication with customers.

When introducing agency banking to a market for the first time, messages concerning price, legitimacy of agent shops, regulations around account opening, and other issues should be openly communicated to customers.

A training participant from Malawi noted that it is crucial to be transparent when working with the low-income segment of the market. This segment is particularly price sensitive, so price visibility in agent shops is imperative and clear communication of price changes is key. Institutions should consistently communicate the changes and ensure that the price is reflected in the quality of service.

Diamond Bank participants noted that, in Nigeria, customers have preferred bank branches over agents due to the misconception that agent shops are not regulated by the Central Bank of Nigeria and thus less safe than branches. This shows that it’s also important to raise awareness about the role of agents and their relationship with the bank to build confidence in the agent network.

Tiyese Molly Chatsala, an agent network manager at NBS Bank, with a potential banking agent.

Lesson 3: Build internal and external capacity to manage the agent network by putting appropriate people and management structures in place.

Agent networks are fundamentally about developing an effective retail distribution network. Making this work requires a significant shift from business as usual at banks. All banks participating in the training in Tanzania highlighted the importance of recruiting agent network managers who can “sell” and attract quality agents in the field. Perhaps not surprisingly, a banker may not be the best person for this role. Agent network managers must have aptitude for sales, an intimate familiarity with the market and notice the dynamic shifts that are taking place in an often fast-paced environment.

In addition to the right people, appropriate policies and procedures must also be in place. Key management questions, such as who will supervise the agent network manager and who will inform senior level managers about the performance of agent networks, need to be addressed in order to ensure clear communication at all levels.

Lesson 4: Ensure alignment with the agency banking strategy across the all levels of the organization.

The success of a sustainable agency banking network depends on the initial buy-in from all levels within the institution. Garnering support for agent banking at the upper management levels was a challenge for most of the banks participating in the training in Tanzania. Without understanding the value and accessibility that agency banking provides, key decision makers may perceive agent banking as a threat. For example, one bank realized that the business rationale of reducing branch congestion did not build buy-in at its branches because branch staff had targets that needed to be reached. Ensuring that incentives are aligned at all levels is key, and fostering strategic alignment across all levels of the institutions will go a long way to ensure sustainability of the agency banking program.

Conclusion At the end of the training in Tanzania, all participants agreed that there are a myriad challenges facing banks to build a sustainable agent network. However, each institution maintains a commitment to bringing access to formal financial services to clients, especially women, in low-income and remote markets. Each of the participants came away with these valuable lessons as well as many shared insights and key action items that they will implement within each of their own institutions.