The world has about 1.7 billion people, where many people have no access to basic banking services such as credit card and savings account. However, digital financial services have the potential to bring the 1.7 billion people in the financial system.
You may find it surprising, but the fact is that today there are more than two billion people worldwide who lack access to basic banking services like a savings account, the card facilities ATM cards credit and debit cards.
However, it is true that Mobile Payment is the Future of Money Transaction where the digital progression opens many horizons and certainly has the potential to bring these that number of people in the financial system. The most common mechanism to implement this plan has been undoubtedly Mobile Money that has been there for almost a year and has been to allow people to deposit and withdraw their money in physical cash easily.
But with making Mobile Money notables to the financial inclusion, which is a term we will discuss more about in the back of this blog steps. It was only a matter of time before the banks realized the fact that business models were certainly changing and there was a great need to develop mechanisms to take advantage of more than two billion unbanked people worldwide. Therefore, today banks are showing keen interest to create mechanisms to get their products and closer services to customers not only not only in the segments untapped market, but work in offering products and services provided by the bank closer to the customer’s door required.
Exploring and Analyzing the Case of Mobile Banking
In the last decade, we have witnessed that banks were putting on platforms mobile telecommunications in order to increase the scope of the Mobile Banking and Its Benefits to customers, where they can easily access their accounts with just a click or tap their mobile devices. Now even though it was a good move at first, but it involves telecommunications costs as they were making a cut in bank transactions that customers made.
This raises a big question, whether this has really solved this issue of access to finance. Well, although it has, but are still deposits are also small which can be provided by telecommunications customers, especially for those whose mobile wallets only allow up to a certain sum of money you are able to maintain.
Therefore, if there is a need of money in small or quick cash, you can enjoy mobile money, but if someone needs money beyond your portfolio, such as a business, then a situation arises hard.
Present Situation in the Banking Arena
According to a World Bank report, about two billions of billion adults throughout the worldwide do not have a basic bank account. There are schemes introduced by the Government worldwide that focus on accelerating financial inclusion in order to eradicate poverty and provide economic stability. However, a 60 percent of unbanked adults who are citing the issue of lack of accessibility of reasonable banking services as a key reason for the absence of a bank account. They cite the issue of lack of facilities and banking services in rural areas, documentation processes, and tedious incorporation as other prominent barriers.
Now, before going any further, let us clarify the term financial inclusion, since it is vital to have a proper understanding of the popular concept in the field of banking.
What is Financial Inclusion?
Financial inclusion is basically an attempt to bring together all people around the world, regardless of their income level in the formal economy. In this case, it is ensured that no individual; no matter how poor, it is excluded from this ecosystem.
In urban areas, banks extend their reach customers by opening several branches and ATMs; However to open a bank branch in rural areas, high CAPEX / OPEX required – but certainly the branch does not generate sufficient return on investment (ROI). This is the main reason why banks have failed to reach rural customers. Therefore, for a rural customer, it becomes difficult to operate mobile banking application and again access to banking services on mobile phones.
What is Agent Banking?
Banking institutions are you doing giant moves to reinvent themselves in a way that allows them to operate in all places, and this concept is known as Banking Agency also known as Agent bank. This is a very cozy concept because of the proximity to banking services; fast response time and customer waited who have longed for decades – especially in rural areas, like small towns and even villages.
Banking agency is basically a new regulation authorizing financial institutions to strengthen a banking agent for the provision of special financial and banking services on behalf of the bank, outside of the conventional routes of ancient halls banking with bank managers, cashiers and ATMs automatic. Although it is very similar to a mobile money agent, but right now, you are depositing and withdrawing cash from your bank account instead of the mobile money account on your mobile phone.
How will Agent Banking function?
Well, it will not be a striking similarity in the operation of mobile money and agent banking. In the case of banking agent, here banking agents will be trained and will be used with a POS terminal or a cellular phone. They will then be equipped with the necessary skills to provide banking services in accordance with standards established by the bank, helping customers to access affordable and fast banking. Typically, these agents provide services such as account opening, transfer funds, pay bills, cash deposits, cash withdrawals; Collecting documents, balance inquiry, bill payments, Mini Statement, or any other service that is permitted by the Banking Association.
How Banks can useful from adopting Agent Banking?
There are countless benefits that come with the adoption of banking agent, such as:
- Attaches segment unbanked in the ecosystem of financial inclusion and therefore helps in expanding the customer base, which in turn leads to huge return.
- Agent bank is also expanding efficient network of agents to reach more and more people as and when necessary.
- It allows banks to reduce time to market of new projects and services to its customer base in a small geography.
- It promotes a culture cashless and offers a range of products and payment facilities through an agent of a single bank.
- This helps in streamlining business processes and improves efficiency. Agent banking is a means of providing banking services to a wider customer base that also service costs low.
High Time for Banks to Create an Efficient Agents Network
What is required by banks it is associated with techies or IT service providers in order to create their own network of banking agents? This way you would be able to successfully face banking services to places either bank branch fails. There are a number of mobile financial services providers that are currently doing the job of creating a branchless bank, where potential customers can easily reach. It is advisable to maintain simple infrastructure with a team of developers, branch managers and bank executives and an agent for the banking needs.
What Sort Of Setup is Needed Here?
In order to create a system of banking agent, one would require an android smart device functionality biometric capture and along with that a solution robust agent bank that is created with the help of a provider of financial mobile service or IT service provider.
In the words of expert Fintech, Sameer Dashputre, bank agent defined today, and is the best way to catalyze financial inclusion by delivering profitability of financial services through a low-cost transfer. He says: “Recently we conclude this project in Africa, where we put machine the position of the state of the art in every room of the agent, which makes it easier for the customer on board customers and also capture all the information a cracking behavior. After KYC process is done, customers can easily deposit, withdraw and transfer money from their accounts. There would be no need to travel to the bank branch in the city, as customers can simply visit the agent bank to enjoy your specific banking services when needed “cities.
New approaches are definitely needed to extend the reach of mobile money and financial inclusions.
Therefore, the mobile money providers should pursue innovation in Finance mobile application development solution to help reduce the burden of managing liquid agents, reduce costs of network distribution agent, and diversify its sources revenue through services such as electronic commerce, mobile wallets and alike.
Finally, all innovations must be developed and tested with the help of a mobile app development company that has experience and expertise in building all kinds of mobile financial solutions, as smart investments can promote progress and can help grow their mobile money services to people around the world.