The Banking Agency Model - In It To Enhance Financial Inclusion
Dear Reader, This week, we tell you our story regarding how we are helping to enhance Financial Inclusion( FI) through the Banking Agency Model. We also share how we can empower you to empower others to be active players in the growth of our economy by becoming an Investrust Bank Plc (IPB) Agent. FI has been a key agenda for sustainable economic development. Central banks worldwide have come up with initiatives to enhance Fl in their countries. The story has not been different for Zambia. Following the first publication of the FINSCOPE survey in 2009, the Bank of Zambia (BOZ), made a commitment through the Maya declaration of 2011 to at least achieve FI of 50% in the medium term from the 37% of Zambia’s population by 2015 (the Maya Declaration is the first global and measurable set of commitments by developing and emerging country policymakers to unlock the economic and social potential of the 2.5 billion poorest people through greater FI). Despite Zambia having done tremendously well in achieving this target, a lot still needs to be done. Through the Maya declaration, BOZ also committed to ensuring that the provision of affordable and appropriate banking and financial services were rolled out to all districts of the country. Up until the end of 2011, about seven (7) rural districts of the country had no banking services. This translated into people travelling to other towns and districts to conduct banking business, they would in some instances spend three days! FI has attracted and continues to attract growing interest from various stockholders who include academicians, politicians, business communities, individuals and the international business community. Some studies have identified FI as one of the factors causing widespread rural poverty in countries especially developing ones. This huge interest in FI exhibits its significance in economic and social development. It shows a growing and tremendous recognition of FI and justifies that access to financial services has an important role in reducing extreme poverty, boosting shared prosperity, and supporting inclusive and sustainable development as highlighted by the World Bank. Setting The Tone For Agency Banking Model In Zambia In an effort to increase FI, organisations such as the International Monetary Fund (IMF), the G-20, International Finance Corporation (IFC), the Alliance for Financial Inclusion (AFI) and the Consultative Group to Assist the Poor (CGAP) have taken an active role at the international stage in gathering data and setting standards of various Central Banks. It is critical to note that in defining what FI is, our Central Bank has clearly stated that FI goes beyond having access to finance, it also means having access to financial products and services that are affordable and appropriate or suitable for one’s needs. The period between 1990 and 2005 saw banks in Zambia close their rural branches in preference to urban ones. This resulted in people in rural areas being financially excluded. Other factors that have contributed to low FI in Zambia include but are not limited to limited financial access for the rural and peri-urban areas, low financial literacy and limited knowledge on the financial sector demand as well as supply and market opportunities countrywide. It became very clear along the years that banking services were/are less accessible in rural areas and that there is very low financial depth for bank products among the adult population in Zambia. This called for alternative or branchless banking solutions. This birthed the Agency Banking Model in Zambia. The Agency Banking Model At Work This is an alternative to traditional brick and mortar way of conducting banking business through branches. More importantly, it is a solution to bridging the gap between the financially included and those excluded. With this model, banks are able to minimise fixed costs of setting up branches by offering bank products and services through cash merchants and retail outlets in a commercially viable way thereby providing them access to additional revenue sources. Jayanty (2012) explains that with the advent of Agency Banking, ’’Financial Inclusion has now come to mean much more than just banking the unbanked. It now refers to the convergence of various bank and nonbank players to provide financial services at lower cost, wider reach and greater convenience to all end consumers of financial services, unbanked or otherwise”. Through this model, customers are able to access banking services in places that are nearest to them in remote and previously unbanked territories. Agencies offer normal banking services such as cash deposits and withdrawals, funds transfers and account opening. Agency Banking Model – A Success Story For Zambia Agency Banking in Zambia is among the important initiatives that BOZ has pledged to undertake to enhance FI. To this effect, BOZ developed a regulatory framework for Agency Banking to facilitate Financial Services Providers to take banking and financial services to all the unbanked parts of Zambia. Many banks have since taken up this challenge and successfully so. Some of the success attributed to Agency Banking include the following: • Wider customer coverage leading to widened and deepened financial market as well as enhanced customer loyalty. • Increased number of bank outlets which has led to enhanced access to financial services, increased financial inclusion and raising overall levels of financial literacy in the country. • Increased Access to bank products and services; Agents offer selected banking services offered by banks thereby increasing knowledge of financial products and services. Becoming An Agent At IBP We are proud to partner with small businesses who share our passion to serve. Become our Agent today and enjoy all the benefits that come with it! What is more? You will be empowered to empower other people to be active players in the growth of our economy. Becoming an Agent at IBP is very easy. All you need are the following: • Own a registered cash-generating business with a fixed operating environment. • Apply to be an Agent! Once registered, we will accord you full support in ensuring that you offer a great service. Please contact any IBP branch nearest to you and join our family of more than 400 Agents. We trust that you enjoyed this read. Please don’t miss our next InvesTalk edition where we will share our story of how we partner with other organisations who share our passion to serve! Have a productive week and stay blessed! For comments or questions email maria.karima@investrustbank.co.zm