Bangladesh boasts of a number of globally reputed digital financial service (DFS) providers. Some banks in Bangladesh have progressively developed alternative digital channels for financial inclusion. Agent network is considered one of the five pillars (including regulator, financial service provider (FSP), technology solution provider and customer) of the DFS success story in emerging markets. The total number of DFS agents doubled in parallel to the growth of customers during the last five years.
This article portrays how agent management model has evolved within the digital financial inclusion space in Bangladesh.
Dutch-Bangla Bank accepted a mix model for a quick expansion of agent network-
In addition to the Master Agent model with the telecom partners Banglalink and Citycell, Rocket also enrolled agents under Direct Agent model in which the provider recruited, trained, and managed agents directly. The MFS pioneer used their own staff for these functions. At end of 2012, Rocket adopted Master Agent (Distributor) and reduced focus of the agent partnership with mobile network operators. Later, it also partnered with Mobicash for Shared Agent network model. Currently, Rocket has all three alternatives of agent management in operation. As one of the early movers this bank also rolled out a Direct Agent model for its agent banking operation.
bKash invented 'mobile money runner', a homegrown technique of liquidity management for agents-
The MFS market leader started with the Master Agent model in partnership with one of the large mobile network operators (MNOs) in Bangladesh, Robi Axiata. bKash faced problems in managing additional layer of MNO in agent management. In early 2012, bKash switched to the Master Agent (Distributor) model (agent-DSR-distributor-bKash) in which the provider appointed a select number of 'master agents' who have proven financial and operational muscle to handle recruitment, operational support, and management of field-level transaction agents. A master agent can be an institution or individuals. It introduced Distributor Sales Representative (DSR) - an employee of the distributor for liquidity management at the agent points. A DSR acts as a 'mobile money runner' to feed a number of designated bKash agents with liquidity.
Bank Asia adopted its pioneering 'micro-branch' model in agent banking-
Agent banking, in contrast to MFS, is largely driven by direct agent model. This could be due to high investment requirements to set up an outlet: An outlet in agent banking is distinctly branded by various permanent marketing collaterals and point-of-sale materials (PoSMs). This requires 10-15 times higher investment than is needed for a typical MFS agent outlet. This model focusses on the three stakeholders-bank itself, banking agents and customers. A shared agent network model may not work in the case of agent banking as Bangladesh Bank has prescribed exclusivity among banking agent outlets. Agent network management partnership between Bank Asia and a2i brought agent banking under the lime light on account of disbursement of social safety net (SSN) through Union Digital Center (UDC) across the country. Bank Asia partnered and piloted agent banking with Bangladesh Post Office for introducing digital banking in post office outlets across the country. The agent banking pioneer also introduced the 'digital banking booth' for RMG workers to digitize their payroll with a complete banking solution. This RMG digital banking booth is an extension of direct agent model owned and managed by Bank Asia.
SureCash and Mobicash moved with a role of agent network manager (ANM)-
SureCash and Mobicash as shared agent network model, partnered with multiple MFS providers (banks) to manage the agent network on behalf of banks. Mobicash by Grameenphone started as a bill payments platform in 2006. SureCash, a local fintech, partnered with multiple banks for facilitating the MFS technology platform and managing agent networks.
Mobicash saw a downward trend, as few of its major bank partners reduced the number of agents partnering through the Mobicash channel. This resulted in a drastic fall in number of agentsfor Mobicash. Grameenphone already separated their bills pay services from Mobicash with a re-launch of GPAY as a new brand. Now, there are two Strategic Business Units (SBUs) - Mobicash as an agent network to support MFS providers (banks) and GPAY, for bill payments and railway ticketing services.
Nagad also adopted the similar Master Agent (Distributor) model to establish its country-wide agent network.
Agent network deployments in Bangladesh: MFS vs agent banking-
* bKash and Rocket have developed some agent management models. They are likely to continue and strengthen these.
* Providers who rely on shared agent networks - SureCash and Mobicash agents - need to distinguish the value proposition they offer their customers. The likes of Rocket (Dutch-Bangla Bank) are already reducing their dependence on the shared agent model. The shared agent network model may cease to exist if SureCash decides to build its business-case as a payment service provider and not as a third-party agent manager.
* The agent banking models may evolve to use Master Agents for managing retail agents. Bank Asia looked for potential master agents to expand their agent network more efficiently nationwide. This bank incubated the similar model with some prominent MFIs, to expand their agent banking network through MFIs' branches.
* One of the banks tried on agent-subagent model as an early adopter in agent banking. In this model multiple agent touch points (sub-agent) may function under a single agent outlet (agent) by sharing a single agent account.
There is no clear champion agent management model. Different types of agent management models have been practiced by providers throughout the world.
* Safaricom M-Pesa in Kenya operated a Matrix Hierarchy model, where it combines the Master and Direct Agent model - Some of its agents are directly managed by M-Pesa while others have a master agent.
* TigoPesa in Tanzania and Airtel Money in Kenya adopted Master Agent management model.
* Equity Bank Kenya followed a Direct Agent model.
* In Nigeria, Central Bank of Nigeriaendorsed a Super-Agent framework where the Super-agent (similar to the master agent) is tasked with recruitment, training, and management.
* In India, both Direct and Master agent models exist. The master agent is typically an institution called BCNM - Business Correspondent Network Manager. BCNM manages the lion share of agents in the market.
Synergy between agent banking and MFS may bring further efficiency for agent network operations in Bangladesh.
Providers may leverage the presence of two different types of agents in the field. A banking agent can act as a re-balancing store for MFS agents or could have an extended role as that of a master agent who can recruit and manage a certain number of MFS agents. This sort of cross industry concept of synergy may be incubated for the near future market development.
Banks and MFS providers continue to expand their agent networks across the country. However, we should keep it in our mind that MFS agents offering cash in and cash out (CICO), money transfer and bill payments services do not essentially create access to formal savings, credit and insurance for the last yard deprived people. Synergy between banking channel and MFS channel may bridge this access gap by introducing digital savings and credit for the last mile citizens of the country.
The contributor is a digital financial inclusion expert and Senior Vice President of Bank Asia. [email protected]