AgriBank is looking to introduce agency banking to ease access to its service and extend market reach in the increasingly competitive local financial sector.
AgriBank Chief Executive Officer, Sam Malaba said the bank is planning to introduce agency banking in 2017. Agency banking is a low cost model and has become the preferred choice for expanding banking and financial service at significantly less cost.
Technology is redesigning how customers take care of finances. Online banking is now the top way Zimbabweans interact with a bank, “beating out” branches, phones, mobile apps and ATMs.
“The bank will continue investing in ICT systems to embrace the technology changes , as customers want to transact 24/7, accessing banking and financial services at their convenience.” added Malaba.
“The bank will embark on an upgrade or replacement of its core banking system. In order to assist the bank to upgrade the system and also ensure the implementation of regulatory compliance requirements, the shareholder injected $USD10 million capital.” Malaba said.
But how prepared are the banks and consumers to embrace this new delivery channel? While some financial institutions have already expressed readiness to commence operations, deployment of the channel will be challenging than many perhaps have imagined. AgriBank said it has a unique advantage of having a wider rural branch network. The Bank has already developed instant card issuance and low cost product “Agriplus” i.e 2 minute account and thus target the unbanked population into the formal sector.
According to the Reserve Bank of Zimbabwe, the use of the agent banking model has potential to significantly increase financial access by the poor and under-served population. The Reserve Bank recognises that agent banking is critical to overcoming existing barriers to financial inclusion and for empowering the population to realise their full economic potential while contributing to economic growth.
However, more financial institutes are looking to the initiative to help cut costs of running fully-fledged bank branches. The legal affiliation of agency permits an agent to act on behalf of a principal.
Agency banking in its simplest form is where an approved financial institution engages an agent to provide special financial services on their behalf outside the conservative avenues of tellers, cashiers and ATMs. These services may range from deposits, withdrawals and savings. This is usually legitimised by formal agency agreements stipulating the scope of the mandate by which the agent may act on behalf of the principal. These concepts may seem far from relevant in the context of Zimbabwe’s economy, but one cannot over emphasise their significance.