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How Do Traditional

Banks Fit Into The

Digital Age

Agent Banking

Perspective

Lowell Campbell

12 November 2013

• Customers have started to question the need to use a branch

• The internet arrived which became the first phase of a disruptive influence

• This has evolved to the smart phone which became the second phase of a disruptive

influence (Brett King, Bank 2.0)

• We have customers who want control, choice and empowerment

• We have customers who want services that are simple, secure, convenient, relevant and

affordable.

• We have customers who hold the dream of a cashless environment but,

The reality is that, in Africa, cash is still king

This is the new world in which traditional banking finds itself!!

What’s Happened to Formal Banking

Let Me Paint You A Picture

A customer is a person who is utilizing one or more of the services provided by the

bank. (wiki-answers)

Entity Customer Person

One and the same

Branchless Banking – The Customer Banks Need To Satisfy

Online banking (or Internet banking or E-banking) allows customers of a financial

institution to conduct financial transactions on a secure website operated by the

institution (wikipedia)

Mobile banking is a system that allows customers of a financial institution to conduct a

number of financial transactions through a secure platform (WAP) on mobile device,

where the platform is controlled by the institution

A system that allows customers of a financial institution to conduct a number of

financial transactions through a secure platform operated by a duly authorised and

controlled third party

Internet Banking - Definition

Mobile Banking - Definition

Branchless Banking Platform - Definition

Challenge To The Banks

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1

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10

% of Market

Income to BankCost to Bank

HNI Executive Entrepreneur Salaried Inclusive

So What’s The Problem

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Cash In

Cash Out-Money Send

Bill Payments

BalanceEnquiry/Statement

Remote Account Opening

Asset Origination

HNI Executive Entrepreneur Salaried Financial Inclusion

So What Is The Impact!!

We Have Created A Monster!!

Agent Banking

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.

How Do We Resolve The Challenge

Look At What The Bank Brings To Bare

Bank

Channel

High Cost Low

Branch ATM Agent

Branchless

Banking

POS Acq Internet Mobile

Enabler

Customer

It means, that we as banks have a great tool box full of tools, unfortunately many

have yet to decide and learn, how to use these tools in harmony, to service an

ecosystem desperately requiring technology, cash, liquidity, access and control

So What Does The Nice Picture Mean

• Customers want cash – in the real world

• Banks are trying to reduce cash

• Banks require third party environments to transact their customers

• This requires interaction with numerous Bank channels

• Agents are customers who use Mobile, Internet, Branches, ATM’s, other Agents etc.

• Customers use Mobile, Internet, Branches, ATM’s, Agents etc.

BUT!!!

At some point cash is required

Banks need to figure out the most efficient, cost effective way to enable interaction from

all bank channels to deliver value and relevance to its customers

So Why The Convergence Digital and Agent Banking

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

.

• Banking is heading to low cost

• Customers are heading towards convenience and control

• However, the current climate demands cash, at some point

• Agents complete the circle by providing the cash

• The Agent, Internet and Mobile Platform’s enable this

But, are impeded in Africa for the need for cash

For Now!!

Conclusion