Agent banking is expected to deepen banking services and create more wealth for the citizenry. But achieving it requires the quick resolution of complaints and an improved regulatory environment, writes COLLINS NWEZE.
Before now, banking was the exclusive preserve of the rich and the educated. Majority of the poor and illiterates kept their money at home. Far-away bank branches, cumbersome account opening requirements, lack of awareness of financial products and services,among others, were barriers that stood between the poor and illiterates and the financial system.
But the coming of agent banking is expected to change all that by bringing into the bracket those at the grassroots. The Central Bank of Nigeria (CBN) signposted this with the inauguration of the Agent Banking Model which liberalised the financial system in favour of all, most especially the poor.
Some of the services to be rendered by the agents are transactional in nature. They include: deposits, withdrawal, cash transfer, account opening, cheques request, bills payment and balance inquiry.
For a country where more than 70 per cent of its 168 million population live below the poverty line and 46.3 per cent unbanked, achieving the goal appears herculean.
For the operators, the CBN Director, Banking & Payments Department, ‘Dipo Fatokun, pegged the minimum shareholder fund for Super Agents at N50 million. He said to be licensed, a Super Agent must be a company with an existing business operational for at least 12 months and registered with the Corporate Affairs Commission (CAC).
He explained that the agent must also have a minimum shareholders’ fund unimpaired by losses of N50 million and obtain a reference letter from a financial institution as part of its documentation for licence request.
Fatokun insisted that with agent banking, everyone can now open and run accounts on the agent bank model. This is by allowing the agents to take customers’ fingerprints since the model runs on biometric-enabled Point of Sale (PoS) technology with that information, open account for the customers.
The CBN’s objective is to reduce the number of adult Nigerians who are excluded from 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. This, he said, can only be achieved with the support of the banks.
“The CBN is trying to tell Nigerians that whether you are poor or rich, speak English or not, have means of identification or not, live in town or village, you have right to banking services. The only thing you need to open an account is the finger God has given you. No one can take it from you because no one has your finger type,” the apex bank said in a statement.
Operational channels
Managing Director, Enhancing Financial Innovation & Access (EFInA), a financial sector development organisation that promotes financial inclusion in Nigeria, Modupe Ladipo, said sustaining the country’s development hinges on ensuring that at least 80 per cent of all adults have access to affordable financial services as well as the right environment within which to flourish economically.
She said agent banking model would ensure increased activity in the delivery of banking services outside traditional brick and mortar bank branches. This, she explained, can be done through additional financial access points such as existing retail stores, petrol stations, post offices or via PoS devices and mobile phones.
But Chief Maurice Adekunle, a traditional ruler based in Lagos, expressed fears over grassroots banking in the country. He said there are several cases where smaller banks closed shops, and the people lost their money. He said operators of the agent banking project needed to assure depositors that their funds are safe.
Group head, e-Business, Sterling Bank Plc, Fatai Amoo, said the bank’s agent banking operation takes security of funds seriously. He said the bank is determined to have the highest level of agent outlets in the country provided such locations have sizeable number of commercial activities and do not pose any risk to depositors.
“We can only set up in locations that have some semblance of commercial activities. The agent must have a running business, integrity, and be a respected person. The environment also needs to be secured. We need someone who is able to read and write,” he said during a meeting with agents at the bank’s headquarters in Lagos. Amoo said agents have better opportunity of accessing credit from the bank.
Agents speak
But Yusuf Obe, an agent, said although banks promised that the biometric-enabled PoS will help in the payment of utility bills, that service is not available. She also complained about tedious account opening process and inability of the machines to check customers’ account balances. Obe said fixing botched transactions is frustrating and takes months to resolve and that has been very bad for the business.
Other agents also expressed fears encountered in the course of the business such agent fraud, unauthorised fees, loss of customer assets and records, data entry errors, system failures among others. Amoo said the bank is working on installing a technology that enables the customer to hear their balances in local languages. “We have all these facilities but they have to be installed in phases so as not to confuse the customers. We also have dedicated team going round, ensuring that nothing goes wrong. We will be in every location that is potentially viable,” he assured.
He said for security reasons, the bank ensures that the agents do not handle more cash than they should ordinarily do. “The agents are economic agents that do transactions and the kind of limit we will allow each of them to do, is also a function of the amount of cash the person can handle,” he said.
He said such agents can also take deposits, but cannot accept deposits above the set limit to ensure they are not exposed to more cash that brings extra security risks around the agent. He said how much an agent earns is a function of volume and value of transactions done. “The agents must be able to go to the bank as quickly as possible to withdraw funds or deposit cash. The more accessible such agent is to the bank, the better,” he said.
Heritage Bank is also one of the banks offering agent banking services in the country. The bank had in March launched its agent banking scheme with the opening of what it calls the ‘Corner Shop’ bank in the Gbagada Plank Market, Lagos.
Ifie Sekibo, managing director, Heritage Bank Limited, said the customers now have the opportunity to enjoy financial services without visiting any physical branch location. He said banking services is for everybody. “With the small bank we have opened in the market, we are offering banking services to everybody in this market, irrespective of your educational background and what you do. From this small bank, you can enjoy a lot of banking services, which is available in the bank branches. You can send money to people, receive money from others, buy recharge card. You even send money to people abroad. You can do all these at this corner shop bank,” he said.
Subairu Akano, a trader said banking is not complete without the customers being able to access credit from the bank. He said there is also need for the bank to assure them of security of funds and efficient services. “We do not want to hear bad story. We want mutually beneficial banking services,” he said.
Regulators
Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Umaru Ibrahim, said although Nigeria has not reached advanced stage in its implementation of agent banking project, it is making progress. He said agent banking would go a long way in reaching out to the largely unbanked population, creating banking representations where banks ordinarily do not have enough resources to establish branches. Ibrahim explained that agent banks is a complimentary policy that is worthy of emulation as it provides simple banking services to a variety of people on behalf of various banks.
He dispelled fears that banks with national banking licence would become lax in branch expansion with the introduction of the agent banks, saying “the banks will now be able to decide which will be more cost effective for them in reaching out to their customers, either opening up branches or using agent banks.”
Bismarck Rewane of Financial Derivatives Company (FDC) Limited said banks’ commitment to financial inclusion will help reduce the level of poverty and underdevelopment in the country advising that funds and credit must flow with ease to those who need them.
He said viability of agent banking will be determined by Gross Domestic Product (GDP) growth, per capita income, poverty and literacy level, mobile phone and internet penetration, electricity and level of insecurity among other factors.
Complaints resolution
The CBN has given banks and agents 72 hours to treat and resolve any customer-related issues in agent banking. The apex bank also said financial institutions shall be responsible for setting up dispute resolution mechanism for their agents to facilitate resolution of customers’ complaints.
The CBN also pegged the minimum shareholder fund for Super Agents in Agent Banking at N50 million, a guideline released at the weekend stipulated.
In a circular to deposit money banks, mobile money operators (MMOs) and switches, signed by Fatokun, the regulator said that Super Agent, must also have a minimum of 50 agents even as applications for such position shall be accompanied with board approval, certificate of incorporation, shareholding structure of the consortium, feasibility study for the agent network among other conditions.
“The Nigeria Interbank Settlement Scheme (NIBSS) shall provide the switching infrastructure to enable inter-scheme CICO at all agent locations. The super-agents’ platform shall be for the management and monitoring of the activities of their agents only and shall not hold electronic money value, whereas, the financial institutions shall provide and operate the Mobile Money platform and hold electronic money value,” he said.
Explaining further, he said all MMOs operators platforms must be up to date (inclusive of mandatory integration to NIBSS), tested and active to ensure interoperability between MMOs. Also, all licensed MMOs shall ensure that their platforms are upgraded as needed, tested and active within 30 days from the release of this document.
For over-the-counter (OTC) transactions, it said the period for holding funds not withdrawn by a receiving customer shall be 30 days. Thereafter, the fund shall be reversed to the sender even as notifications sent to the receiving customer shall indicate the expiry date for the transaction.
Director, CBN’s Development Finance Unit, Paul Eluhaiwe, said agent banking requires the engagement of pre-qualified individuals in different locations that are predominantly financially-excluded to serve as agents to the bank under the CBN approved model.
Eluhaiwe said CBN’s Consumer Protection Unit has been established to ensure that customers have an adequate level of protection. This, he said, will build consumers’ confidence in the industry as previously unresolved issues are now handled appropriately. He said there are different layers of inspectors ensuring that customers deal with only banks’ approved agents.
He recalled that in 2009, the CBN had commenced measures to open up banking channels to non-bank agents. An amendment to the Banks and Other Financial Institutions (BOFIA) Act allowed banks to start using agents to deliver financial services. However, it was in 2012 that the financial industry, along with other stakeholders decided to make financial inclusion a top priority and launched a National Financial Inclusion Strategy.
