For example, in September last year, the Wave mobile app raised more than $200 million to expand its money transfer services in its largest market, Senegal, and other countries, after its launch in April in Ivory Coast. Yet its basic services are no different from those of a bank. The difference lies in the way these services are provided, i.e. using the Agency Banking model of setting up agents in underserved areas, on mobile platforms.
The difficulties of the banking sector begin first with their inaccessibility, due to the limited number of bank branches concentrated in cities, while the majority of the population still lives in rural areas.
This scarcity of agencies leads to much higher costs for clients, both in terms of travel and time. For example, Cameroon has about 2.2 bank branches per 100,000 inhabitants, while 34.6% of its adults have a bank account, an average of almost 8,000 customers per branch – for comparison, the average in the European Union is 22.3 branches per 100,000 inhabitants and less than 3,500 customers per branch.
If customers only go to their branch once a month, this represents 160 customers served every day in European branches, compared to almost 370 per day in Cameroonian branches, which means that Cameroonians have to face much longer queues at the bank, not to mention the long journeys to get there.
Bank charges can also be high, and combined with low efficiency in Côte d’Ivoire, where there are more bank branches per person than in Cameroon, with 4.9 branches per 100,000 people, an instant transfer of bank account to another costs up to 17,000 CFA ($30) in transfer fees, takes up to three days to arrive, and sometimes fails altogether.
Faced with these inconveniences and high costs, only 41.3% of adults in Côte d’Ivoire have a bank account, and in many countries in the region the total is even lower, for example in Madagascar, with 17, 5%.
Yet banking services are not universally unpopular in Africa. In Kenya, 88% of the population has a bank account, and in Mauritius, 89.8%, according to analysis by Accuant, a specialist in identity documents.
The difference lies in the services offered by their banks. In Kenya, for example, bank agents using Agency Banking solutions made 163 million transactions in 2019, five times more than the 30 million transactions of traditional bank branches in 2012. These included all the elements offered by telecom operators and start-ups, but on an existing base of security, brand recognition, organizational capacity and banking licenses allowing savings to be made.
In addition, studies by the GSMA, which represents the global mobile telecommunications industry, have found that agent networks have up to 20 times greater reach than bank branches, and up to 7 times greater than that of ATMs. The IFC indicates that transactions carried out by agents cost up to 25% less than those carried out by traditional agencies.
Agency Banking systems have also transformed the customer journey. Fidelity Bank Ghana can now onboard a new customer in just 5 minutes using agents.
As providers of Agency Banking software solutions across Africa, we have seen many of these gains translate into rapid and sustainable growth – in fact, the Agency Banking model can deliver a return on investment of more than 300% in the space of three years. For example, we have seen a microfinance institution multiply its points of sale by 15 thanks to the launch of a network of agents, and another multiply by 7 the volume of savings placed with it in one year. The IFC reports similar transformations, citing the example of a bank where 70% of transactions now go through a network of agents, reducing queues and improving the customer experience.
Governments also use agent networks and agency banking to deliver pensions and other support in hard-to-reach places. Separately, think tank CGAP highlighted the “vital” role of agency banking in the response to the COVID-19 crisis, ensuring access to financial services while reducing transport use and crowding. in agencies.
It is now possible to combine Agency Banking with digital banking services based on mobile electronic wallets (Wallets), via a single, integrated platform, in order to offer even greater accessibility. Similarly, new offerings, such as our Managed Service Agency Banking solution, offer a faster and more accessible time-to-market model for financial organizations of different sizes.
This means that, for all the fanfare surrounding new financial services applications, it is banks that are best able to mobilize new investment in agent infrastructure, with broader services and greater gains and growth. quick. So start-ups raise hundreds of millions of dollars and are called “unicorns”, but it may well be the banks that end up providing financial services to the majority, through agents and solutions. of Agency Banking.