Banks and banking services in Nigeria and the world continue to be evermore evolving. More and more innovations and developments keep rising daily, and there is more exposure leading to an increase in financial inclusion. One of such events is the uprising of agency banking. This article provides information on agency banking, and just how it works.
What is agency banking?
While agency banking is on an uptrend, still unknown to all and sundry.
In most cases, this is because the term agency banking needs a better explanation.
And while you may have come across or even used this platform, you may not have recognized it as agency banking.
It basically provides financial services through third party agents who are not traditional bankers or banking institutions.
In simple terms, an agreement exists between a financial institution and a third party. Where the third party provides financial services to the public on behalf of the bank or financial institution.
It brings the bank to the customer’s doorstep, literally. For example, Polaris Bank Sure Padi
The aim of agency banking is financial inclusion.
Where banking keeps evolving and changing in scope and operations. The most essential components are not entirely accessible to many people. Various sections and areas exist without a bank, and so it is impossible to carry out most financial and business activities without a bank.
Agency banking solves that issue, providing access to these services, as mentioned earlier. It came to prominence in Nigeria in 2013, a move fully sanctioned by the Central Bank of Nigeria.
Who is a bank agent?
A bank agent is a third party or individual who provides retail banking services to the public on behalf of the banks and other banking financial institutions.
He is not an employee of the bank, but merely a third party that provides these banking services for an agreed commission. An agent bank offers a slew of financial services to the customers, especially those in rural or hard to access areas.
There are tens of thousands of registered agent banks across different parts of the country.
How does agent banking work?
Agent banks are existing businesses with a minimum of one year in operations. Agent banks make applications to banks to provide banking services on their behalf. When the bank and the Central Bank approve the process, the agency is fully functional.
Services Rendered By Agent Banks
The services agent banks provide include the following;
- Account opening,
- Account balance enquiries
- Payment of salaries
- Cheque book request
- Bills payments
- Issuance of mini-statements
- Cash deposits, cash withdrawals, and funds transfers.
- Collection of bank mails
How Bank Agents Make Money
An agent gets paid a certain amount based on the transactions they handled on the bank’s behalf. This amount can vary depending on the bank’s agency agreement.
A monthly settlement system is typically used, with commissions credited to the agent after deduction of due charges. Recently, there have been studies showing that agents with high volume of transactions can earn as much as N200,000 after deductions each month.
Agency banking is a significant factor in improving financial inclusion. It brings banking services to the customers’ doorsteps, making sure that everyone that needs banking services gets them quickly and with no hassles.
The central bank of Nigeria has encouraged the process of agency banking through the use of technological advancement.