how can small island nations benefit from agent banking
TRANSCRIPT
Agent Banking: How Can Small Island Nations Benefit and What are the Supervision/Oversight Issues
John Owens, Senior Policy Advisor, AFIPIRI Meeting, Dili, Timor-Leste, May 2015
Agents Defined
“Any 3rd party acting on behalf of a bank or other financial services provider (including an e-money
issuer) to deal directly with customers”
AFI | Alliance for Financial Inclusion
AFI Digital Financial Services Working Group (DFSWG) DFS Basic Terminology http://www.afi-global.org/library/publications/mobile-financial-services-basic-terminology-2013
Agent Regulatory Framework
AFI | Alliance for Financial Inclusion
Laws
Regulations
Guidelines
Agent Models
AFI | Alliance for Financial Inclusion http://cfi-blog.org/2014/03/11/microfinance-industry-needs-an-infrastructure-fix/
Bank Non Bank Hybrid
Agents: Basic Services
Client registration
KYC outsourcing
Remote account opening
CICO
Payments
AFI | Alliance for Financial Inclusion http://blog.microsave.net/wp-content/uploads/2014/03/mor-lks2.jpghttp://www.developmentoutlook.org/2012/11/analyzing-business-correspondent-model.html
Types of Agent Banking Services
Collection of small value cash deposits and cash withdrawals
Inward foreign remittance disbursement
Facilitating small value loan disbursement and payments
Facilitating utility bill payments
Cash payment under social safety net programme
Facilitating fund transfer
Balance inquiry
Collection and processing of forms for account opening
Loan application, credit and debit card applications
Monitoring of loans and advances and follow up of loan recovery
Receiving of cheques for deposit
Other functions like collection of insurance premiums
AFI | Alliance for Financial Inclusion https://www.upsides.com/2013/03/25/banking-beyond-branches/
Bangladesh: Mobile-Enabled Agent Banking
AFI | Alliance for Financial Inclusion
Central Bank Issued Clear Guidelines
Agent Banking & Allowable Services
Eligibility Criteria for Agents
Allowance of Non-Exclusive Agreements
Risk & Operational Issues
Consumer Protection Principles
Results
541,000 active agents 25.2 M registered
clients 12.2 M active clients
Agent Banking & Outreach in Brazil
Outreach figures bank agents vs. branches in Brazil
AFI | Alliance for Financial Inclusion
Solomon Islands: An Example of How Small Islands can Benefit from Agents
AFI | Alliance for Financial Inclusion
Central Bank Enabling Environment
Agent Banking Regulations
Expanded Eligibility Criteria for Agents
Tiered KYC Regulations
Close dialogue with the Private Sector in Developing Policies
Financial Literacy and the role of the Private Sector
Results
From 80% without a bank account 5 years ago, 71% now have access to basic banking services.
Minimum Standards for FIs in Requesting Agent License
Policies related to agent selection, management, monitoring, operations, compliance, conduct and service quality
Customer protection measures, including awareness and education strategies
Infrastructure to support agent banking including system and technology requirements
Controls and monitoring to ensure compliance with relevant legislation and regulatory requirements
Business Continuity Plan (BCP) and contingency arrangements to ensure continuity of agent banking services in the event of disruption.
AFI | Alliance for Financial Inclusion
Selection Criteria for Agents
Competence to implement and support the proposed activities
Financial soundness and cash handling capability
Ability to meet commitments under adverse conditions
Business reputation
Ability to offer technology based financial services
Security and internal control, audit coverage, reporting and monitoring capacity
Due diligence and background check to ensure suitability
AFI | Alliance for Financial Inclusion
“Know Your Agent”
Agency Agreement Conditions
Define the rights, expectations & responsibilities of the parties
Set the scope of fee structure
Services are subject to regulatory review & oversight
Allowed & prohibited functions
Safe‐keeping of all relevant records, data & documents
Client confidentiality
KYC requirements
Default, penalties & termination of contract conditions
AFI | Alliance for Financial Inclusion
Other Agent Banking Guidelines
Internal audit & monitoring requirements
Customer protection standards
Dispute resolution rules
AML/CFT guidelines
Risk mitigation rules
Disclosure requirements
Branding & advertisement rules
AFI | Alliance for Financial Inclusion
Exclusivity of Agents?
Should agents be exclusive? Some jurisdictions that allow exclusivity Examples & issues Most now are non-exclusive for non-banks Exclusivity for bank agents
AFI | Alliance for Financial Inclusion http://www.gemalto.com/companyinfo/digital-stories/india
Emerging Issues
AFI | Alliance for Financial Inclusion
Rural vs Urban agents
Inadequate liquidity
AML/KYC abuse Tracking inactive
agents
Lack of business continuity
