With the rise of unemployment, a surge in prices of commodities, and the impact of COVID-19, more innovations keep arising every day and one of such innovations which promote financial inclusion is Agency Banking.
Most people do not know what the term agency banking means even though they make use of the system every day. Agency banking provides financial services through third-party agents who could be anyone and are not traditional bankers or banking institutions. Basically, it means those “POS transactions” we do every day. Agency banks send applications to banks to provide banking services on their behalf. If the applications are approved, then it becomes functional.
There are thousands of registered agent banks across Nigeria today that provide various banking services ranging from cash withdrawal, cash deposit, cash transfer, payment, and more. Agent banks bring banking services to the customers’ doorsteps, making sure that everyone that requires banking services gets them instantly. Several people use agent banks because of their accessibility and ease of using them. A survey carried out by Enhancing Financial Innovation & Access (EFInA) showed that a quarter of respondents stated that the location of banks is too far from their place of residence. The presence of agent banks has also reduced the rate of unemployment by providing an easy way of becoming an agent and the opportunity to serve different banks in absence of an exclusive arrangement.
In recent years, OPay, Baxi, Paga, and MTN have emerged to be popular agent banking systems with different registered agents.
Different banks now have their agent banking system like FirstMonie for Firstbank, Access Bank, Zenith Bank, and more. Two of these banks, Access Bank and FirstBank, reported growth in their agent banking units with around 59,000 and 100,000 agents, respectively.
Access Bank also stated that it added 4.46 million new bank customers through its agents within the last two years.
Agent banking not only introduces a hassle-free system of banking, it also reduces unemployment as agents have flexible means of getting a POS device from the respective institutions to start the business.