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Branchless or agent banking provides predefined banking services through third-party environments, targeting a specific market with a focus on simplicity, security, and affordability. The document discusses the cost-effectiveness and deployment challenges of branchless banking compared to traditional banking methods, including regulatory impacts and the importance of a phased approach. It highlights the need for banks to carefully implement regulations to avoid stifling market growth while ensuring secure service delivery.
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Panel1 lowell campbell
- 1. Branchless/ Agent Banking The FI Interaction
- 2. Branchless/ Agent Banking– a Practical Definition The provision of certain predefined banking services to a select target market, through liquid, third party environments, in such a way that the services are simple, secure, convenient, relevant and affordable. These services should be seen as an extension of the bank and from a banking perspective, be able to be provided in such a way that a significant portion of bank costs can be avoided or significantly reduced.
- 3. Branchless/ Agent Banking- In Context Bank Channel High Cost Low Agent Branch ATM Branchless POS Acq Internet Mobile Banking Enabler Customer LC
- 4. Branchless/ Agent Bankingv Branch – The Landscape Branch Branchless Cost To Deploy Channel 10 9 8 7 Time To Deploy Cost To Acquire Customers 6 5 4 3 2 1 0 Control Of Channel Cost To Maintain Channel Proximity To Target Customer Cost To Serve Customers LC
- 5. Branchless/Agent Banking -Segment Utilisation HNI Executive Entrepreneur Salaried Financial Inclusion Cash In 10 9 8 7 6 Asset Origination 5 Cash Out-Money Send 4 3 2 1 0 Remote Account Opening Bill Payments Balance LC Enquiry/Statement
- 6. FI The Challengeto Banks % of Market 10 9 8 7 6 5 4 3 2 1 0 Cost to Bank Income to Bank HNI Executive Entrepreneur Salaried Inclusive LC
- 7. Branchless/ Agent banking– Consumption Model Cash In 10 8 % of Market 6 Cash Out-Money Asset Origination 8 Send 7 4 6 2 Cash In 5 4 8 0 3 2 7 1 Remote Account Bill Payments Opening 0 6 5 Balance Cost to Bank Income to Bank Enquiry/Statemen t 4 3 2 1 0 Bill Payments Cash Out - Money Send Entrepreneur Salaried Inclusive LC
- 8. Branchless/Agent Banking -Method In The Madness 3rd Party Branchless Cost 9 8 7 6 5 4 3 2 1 Control 0 Reach Time To Market LC
- 9. Branchless/ Agent Banking– Agent Led – Bank Driven • A very clear tiering, of which services will be provided by which agent type. • Very specific controls, initiated by the bank and regulators, but congnisant of the environment in which it operates • A phased approach so as to gain traction, learn and understand the Branchless environment • Managed Structures
- 10. Branchless Banking –Regulatory Impact Definition: “The provision of certain predefined assisted banking services to a select target market, through liquid third party environments, in such a way that the services are relevant, affordable, convenient and above all secure.” • By pure definition risks exist and with it the need to regulate the environment. • Any Bank involvement in the delivery of financial services will be and should be regulated irrespective of the channel or enabler The Impact : • A trusted environment where fulfillment of the transaction is assured and where not adequate, mechanisms exist from a regulatory framework to ensure fulfillment. • A slightly cumbersome registration and transactional environment • Potentially slower adoption • However growth will be sustained and long term in nature irrespective of the enabler As a Bank however we need to ensure that the implementation of the regulations occurs in such a way that we take cognisance of the market we are serving and the enabler used. If not Branchless Banking has the potential to stifle a market
- 11.
Editor's Notes
- #2 Think outside the box Branchless is a journey from the known into the unknown e.g lending to penny lending All the stats do not current help with customer traction There in lies the challenge To embark on the journey you need to understand its place This will aid in the decision process
- #3 “Predifined”Services that would likely include cash in , cash out, bill payments, remote account opening, asset origination, and to a lesser degree balance enquiry and mini statement.:“Select”This depends on individual organisations and the target market they would like to serve via the branchless channel.Examples would be, the inclusive market, salaried market, same market\\“Liquid”This is simply the ability to fulfill a transactionon demand. i,.e sufficient cash in till and balance on efloat to complete a transaction“Third Party”By pure definition this includes entities not affiliated to the bank and who will utilise their own staff and infrastructure to provide services on behalf of the BankExamples would be Pharmacies, Supermarkets, General Traders, Fuel Marketers etc “Relevant”A customer will not use what they don’t need. The need is defined by the customer and not the bank.“Affordable”The service should be perceived by the customer as affordable. There must be a clearly tangible price advantage to the customer“Convenient”Africa is a tough, expensive and difficult continent to move around in. Convenience in this context is defined as services that are as close as possible to my need.“Secure”The customers needs to know that their funds are safe irrespective of the channel or enabler used. The customer needs to feel as safe as if they entered a bank branch. They need to know that a third party will be as safe as using a bank staff member in a bank branch using a bank terminal. In Africa this is a deal breaker
- #4 Agent/Branchless Banking and where it exists within the overall context This positions the definition in a graphical representation and the relevance of enablers and cost Talks to the enabler “supermarket”
- #5 Here we understand the Branchless v Branch environment and the factors that have an impact on each and how if we isolate branchless we see the move toward lower cost relative to branch and the journey thereof The key is proximity and here one can discuss how branchless can address this issue. Allude to control as well and the impacts there of and how this leads into the reglulatory spaceUnderstand your marketWho are you trying to bank and whyHow does your market want to transact Where are they happy to transactWhat enablers are they happy to engage withUnderstand your current cost structureHow much is it costing per transactionHow much is it costing to acquire customersHow much is it costing to serve your customersUnderstand the third party distribution landscapeMap to defined target market in terms of the key principals - relevant, affordable, convenient and above all safeUnderstand all regulatory, brand, IT, communication, servicing, logistical risks that exist from a banking context. Identify the mthod to reconcile the above risks with an environment that is entrueprenurial by nature
- #6 To understand the journey toward Branchless you need to understand how the current customers transact and what transaction types they would typically use. This allows for extracting the Branchless Consumer space From this one can isolate the relevant transactions and the cost to income that pertains to those transactions Remote account opening while relevant presents a far greater challenge in respect of risk and compliance and KYC and the impacts thereof and may not be relevant to a particular market segment This picture allows you to choose the segment that is relevant to your business and your strategies
- #7 To further segment the market one needs to understand the relationship between the above elements. From this we can extract 3 segments that would typically make up a branchless environment It is clear as to the cost to income relationship
- #8 What does this all actually mean Three key transaction sets that are highlighted \\ forms the basis for understanding how branchless can reduce costs you need to know what transaction before you can embark on the journey
- #9 this is what branchless gives you low cost _ 3rd party carrying costs huge reach – use tanzania as an example Increased time to market BUT far less control hence regulation