Against the background of rising competition in the financial services industry coupled with Nigeria’s tough economic conditions, banks are looking to expand retail financial services through agent banking, which was pioneered in the country by Sterling Bank. Tony Chukwunyem writes
If information emanating from commercial lenders in the country is anything to go by, it would seem that the Agent Banking scheme launched by the Central Bank of Nigeria (CBN) four years ago to boost savings and extend financial services to the unbanked, is making progress.
A few days ago, for instance, one of the industry’s key tier two lenders, Heritage Bank Plc, announced that it had deepened its retail banking structure by growing its agent banking base to 400 “Corner Shops” in different parts of the country. It also announced the launch of agent banking services at the coastal town of Badagry, Lagos State, where it had inaugurated an agent, “Thy Grace”, to provide a range of financial services to customers in the neighbourhood of Mowo under the Badagry Local Government.
In a statement, the CEO of Heritage Bank, Ifie Sekibo, explained that the lender has continued to set standard in the launching of “Corner Shop” to cater for the needs of traders and artisans at different locations across the country.
Sekibo said the shop was aimed at giving the unbanked, especially in the rural areas, the opportunity to enjoy financial services without the risk and stress of walking kilometres in order to visit a bank branch.
Commenting on the launch, the Zonal Business Coordinator, South-West, South-South, Agent Banking, Heritage Bank, Oluwakemi Adewunmi, said that with the new agent commissioned to represent Heritage Bank in the locality, banking services would no longer constitute a headache, but rather would be stress-free for all categories of bank customers, adding that both customers and non-customers of Heritage Bank can benefit from the services of the agent.
The bank had in March 2016 launched its agent banking scheme with the opening of what it tagged the “Corner Shop” bank in the Gbagada Plank Market, Lagos.
Also, another tier 2 bank, First City Monument Bank (FCMB), announced last December that it planned to grow its agent banking base by 91.13per cent to 800 agents this year.
FCMB said : “Our agents banking initiatives is on course. We currently have 71 agents nationwide, with a plan to grow to 800 agents, which accounts for 729 increase representing 91.13 per cent by 2017.”
Boost for financial inclusion
The CBN had in guidelines unveiled in February 2013, described agent banking as the provision of financial services to customers by a third party (agent) on behalf of a licensed deposit taking financial institution and/or mobile money operator (principal).
The financial services are typically delivered outside conventional bank branches, often using non-bank retail agents and relying on technology, such as card readers, Point-Of–Sale (POS) terminal or mobile phones for real time transaction processing.
It further stated that the objective of the scheme was to enhance financial inclusion and provide delivery channels for offering banking services in a cost effective manner.
Under the guidelines, agent banks are expected to receive cash deposits , disburse cash, carry out services such as bills payment (utilities, taxes, tenement rates, subscription etc.), payment of salaries, funds transfer (local money value transfer), balance enquiry, generation and issuance of mini statement, collection and submission of account opening and other related documentation among others.
In addition, they are to carry out cash repayment of loans, cash payment of retirement benefits, cheque book request and collection, collection of bank mail/correspondence for customers and any other activity as the CBN may from time to time prescribe.
The guidelines further stated that a financial institution may engage super agents- agent networks that will establish a collection of outlets or franchise within its wide network of outlets to be under its supervision and control, adding that the bank can also engage a sole agent, that is an agent who does not delegate power to other agents, but assumes the agent banking relationship by itself.
According to a CBN document, the apex bank’s target is to, through agent banking, reduce the number of adult Nigerians excluded from the formal financial services from 46.3 per cent in 2012 to 20 per cent by 2020, with specific targets for payments, savings, credit and insurance. It, however, stated that this can only be achieved with the support of commercial lenders.
Sterling Bank’s pioneering role
Interestingly, one of the banks that has actively keyed into the agent banking scheme is Sterling Bank Plc. In fact, less than a year after the CBN unveiled the guidelines, the lender launched its agent banking model at the Asejere market (Makoko fish market) Yaba, Lagos, to promote financial inclusion among traders.
Speaking at the event, the immediate past governor of the CBN, Sanusi Lamido Sanusi, described it as a “fantastic initiative” by Sterling Bank, stating that the move can deepen the penetration of banking services across the country.
He said: “We have about 39 per cent of the adult population still unbanked and we hope to reduce it to 20 per cent by year 2020. If you consider the figures closely, there is huge disparity by regions and by gender. You’ve got about 80 per cent of rural dwellers unbanked; you have about 70 per cent of the North East and North West unbanked and under banked and you have a large proportion of women unbanked compared to men.
“So the focus is how to bring the rural poor, women, the North-East and the North-West into the banking fold. If other banks join Sterling Bank, we will make huge progress,” he added.
Speaking at the event, the Managing Director/CEO, Sterling Bank Plc, Mr. Yemi Adeola, said the initiative was the bank’s way of creating wealth among Nigerians.
“There are more than 70 million Nigerians who are living below the poverty line. As a bank, we owe it a duty to play a role in creating wealth across board.
“It is not enough to embark on corporate social responsibility of charity initiatives. We must remember that progress in the poorest parts of the country will benefit all of us in the long run” he said.
A source at Sterling bank disclosed that the lender now has over 600 agents and that it was training some new agents to enable it reach out to the unbanked and under banked.
The source said that features and benefits of the Sterling agent banking initiative include, zero opening balance and no daily minimum balance.
New Telegraph also gathered that tier I lender, First Bank of Nigeria, would, in the coming days, launch its agency banking services for its numerous customers.
A source at the bank said: “We are in the process of rolling out our agency banking services to serve our customers. It is a critical element of our retail strategy. We currently have over 14,000 agents serving our mobile money operators and providing cash in, cash-out, enrollment services and indeed other financial services.”
Similarly, another lender, Ecobank Nigeria, had early this year inaugurated an agency banking outlet at Mowe Ofada, Ogun state. The lender explained in a statement that the development was in line with its strategy to convert Airtel franchise locations to agent banking locations.
“Ecobank’s agency banking service is aimed at offering affordable access to financial services to promote and deepen financial inclusion in the Nigeria economy,” it said.
According to Head, Consumer Distribution, Ecobank Nigeria, Tunde Kuponiyi, agency banking was a part of the bank’s distribution strategy to take banking service to the door-step of the customer, adding that, it offers greater convenience and accessible financial services in a cost effective and secure manner
He stated : “Banking services provided by the agent banking locations include opening Ecobank Quick Account, cash withdrawal and deposit into Ecobank accounts; funds transfers into any bank account in Nigeria, bills payment (utilities, cable subscription, etc), mobile phone airtime top up amongst other services.
“Some of Ecobank agent partners already offering this service in Lagos are Buymore Supermarket chain (in Agungi-Lekki, Kilo Surulere, Ikeja GRA), Kenzo Retail Supermarket chain (in Lekki, Festac and Apapa) and Save-a-Lot Supermarket in Egbeda, among others,” he added.
Although it continues to be hindered by poor network and other challenges, industry watchers believe that commercial lenders have little choice but to actively key into the agent banking scheme. They argue that apart from the fact that the scheme will boost business for banks by ensuring that financial services get to the unbanked, it will also promote economic growth.
As the Director, Banking and Payments System Department, CBN, Mr. Dipo Fatokun, explained at a recent seminar on agency banking, the scheme was needed given the nation’s growing population.
He said: “Going by the CBN projection that come 2020, the number of bank branches would increase from 5,797 to 10,000, the big question on everybody’s lips is whether the number will be enough, considering the fact that the nation’s population, which is presently put at over 160 million would be expected to be over 200 million.”
News15 hours ago
Amosun, Osoba absent as Ogun APC makes U-turn on consensus
News16 hours ago
Italy court sentences two defendants in $1.3bn Nigeria oil scandal
Politics9 hours ago
Why Wike moved PDP’s convention to Rivers – Northern group
News10 hours ago
Dogara officially dumps APC, submits PDP nomination form
News10 hours ago
Osun Election: Court restrains Police from arresting PDP’s candidate Adeleke
News9 hours ago
Buhari lacks capacity to rule Nigeria- Saraki
Metro and Crime2 hours ago
Five killed as rival cult groups clash in Lagos
Politics2 hours ago
Massive deployment of security personnel for poll