As a society, we often hear about the need for financial inclusion and how ensuring everyone has access to financial services is essential. However, the reality is that many people, particularly in developing countries, need access to essential financial services such as banking, insurance, and credit. There are many reasons for this, including lack of physical infrastructure, cost barriers, and lack of relevant products and services. The Unbanked & Underbanked Population are those who don’t have access to the financial services that most of us take for granted, and unfortunately, this population grows every day. Financial service providers, such as banks, insurance companies, and microfinance institutions, are often challenged with providing services to these populations due to the costs associated with operating in remote areas while adhering to regulations and maintaining security.

Understanding the Need for Agency Banking

One innovative solution to bridge the gap between this Unbanked & Underbanked Population and financial service providers is through the agency banking model. Agency banking involves banks partnering with third-party agents, such as general retailers, convenience stores, and petrol stations, to offer essential banking services. These agents serve as an extension of the Bank. They can offer deposits, withdrawals, and bill payments to underbanked customers needing access to traditional bank branches. The agency banking model is gaining popularity as it is cost-effective and allows for increased outreach to areas that may need to be more profitable for banks to operate independently.


While agency banking is a step in the right direction, the challenge remains in ensuring that the security and privacy of customer data are maintained. Additionally, the agents must be trained and equipped to handle sensitive customer interactions, such as providing financial advice, explaining product terms and conditions, and assisting with complaints. For agency banking to be successful, sustainable, and scalable, these critical factors must be considered.
Providing financial services to the Unbanked & Underbanked Population is not only profitable, but it’s also the ethical thing to do. By bridging the gap between these populations and financial service providers, we can ensure everyone has access to the financial services they need to succeed in today’s economy.

Proof that shows the rapid growth of Agency Banking in Developing Countries

Evidence of the success of Agent Banking can be viewed in an extract from a December 2020 report from Consultive Group to Assist the Poor (CGAP).
  • In China, with over 1 million Service Points and 500 million transactions, Agent Banking achieved coverage of 97% in rural areas in 2018.
  • In Colombia, The number of agent points reported by financial institutions increased 33 times between 2007 and 2018, from 3,500 in 2008 to more than 116,000 in 2018.
  • Agents in India are also referred to as Business Correspondents (BC). With the Central Government focusing on financial inclusion, the rural BC count has increased from 34,174 outlets in 2006 to 531,229 in 2016. 
  • In Indonesia, Three categories of agents – Laku Pandai (LP) for financial inclusion, Layanan Keungan Digital for e-money services by banks and non-banks, and Fintech Agents for digital payment solutions. LP and LKD agents numbered 1,004,547 and 385,000, respectively, for 2018, while Fintech Agents numbered 6,200,000 in 2019. 
  • Since 2007, agents’ growth has outpaced all other channels in Kenya, and 31% of appointees are in rural areas. The total number of Bank and mobile money agents was 190,000 in 2019. Appointment of new agents, especially in the sparsely populated frontier, has been indicated as a priority.

How do Agency Banking services help foster Financial Inclusion in Emerging Markets?

Growth of business

  • Improve access to financial services in line with Bank’s corporate philosophy
  • Attract New Members
  • Make it easier for customers to access Bank services closer to their home
  • Increased branch revenue

Reduce the Total Cost of Ownership for our branch network

  • Reduce the cost of providing financial services to Bank customers
  • Leverage the infrastructure that Agents already own and reduce associated costs
  • Reduce branch operating costs, e.g., lease, utilities, security, maintenance, etc.

Competitive positioning

  • Competitive positioning in the Banking industry
  • Position ourselves for the convergence of telephony and financial services
  • Neutralize advantage of other Banks: Coop – SACCOs, Post offices

Take advantage of a changed regulatory environment.

Agency Banking Delivery Channels Journey

USSD as Channel for Agents to perform Transactions 

  • A limited number of Services can be offered on this Channel
  • However, this Channel is still very popular in Africa and is mostly controlled by Telecom Operators

Mobile App on Smart Phones

  • An unlimited Number of Services can be offered on this Channel
  • Advance Services like Account Opening, Ticket Booking, etc., can be enabled on this Channel
  • The only Limitation is for acquiring Card Transaction; you need to use an additional Card Reader, i.e., mPOS Device
  • Transaction Receipts can be sent as an SMS/email or printed by connecting an additional Thermal Printer

Smart Android POS

  • Same like Smart Phone, all advanced services can be enabled on this Channel
  • Comes with an inbuilt Card Reader & Thermal Printer for Receipt Printing

Modefin Agency Banking Solution to Expand Your Business

By establishing a strong agent network model to serve the rural and unbanked people, we create an Agency Banking solution that enables banks and financial institutions to avoid spending money on physical branches.

Also, our Agent Banking Application mitigates risks such as cash theft, identity theft, errors, or instances of fraud by deploying software safeguards such as two-factor PIN authentication (Card + PIN), re-authentication after defined session periods, SMS confirmation of transactions, unique identification code for customers, and encrypted communication.