Agency banking has emerged as a pivotal player in the financial services sector, contributing massively in transaction value. This innovative banking model allows individuals and small businesses in underserved areas to perform basic banking services through authorized agents, bringing financial inclusion to millions across the country.
With the rise of this banking system, individuals who were previously excluded from the formal banking sector can now access services such as cash deposit and withdrawal, funds transfer, bill payments, and even opening bank accounts. This not only empowers the unbanked, but also strengthens the overall economy by promoting savings and facilitating transactions.
Speaking at the 7th Annual Conference of Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), with the theme, “The Future of Agency Banking: Creating Value for Sustainable Relevance” The Deputy Senate President, Sen. Barau Jibrin said agency banking contributes seven trillion Naira annually in transaction value.
According to him, the banking system served over 60 million customers with limited access to financial services, and has significantly boosted financial inclusion. The lawmaker said that President Bola Tinubu’s administration was determined to expand financial inclusion using agency banking as a priority. He said the Senate is also committed to supporting the growth of the financial services sector.
Also speaking, the Minister of State for the Federal Capital Territory (FCT). Dr. Mariya Mahmood said Agency banking has become a potent instrument for increasing financial inclusion and granting access to financial services, particularly in underserved and remote areas.
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“We are committed to supporting initiatives that promote the growth of agency banking while ensuring regulatory frameworks that prioritize consumer protection, transparency, and integrity. “The challenges we face in this rapidly evolving financial landscape demand collaborative efforts between government, regulatory bodies, financial institutions, and stakeholders. “It requires collective dedication to leverage the potential of agency banking to its fullest, and ensuring that it remains relevant, sustainable, and responsive to the needs of our citizens,’’ she said.
What is fueling the growth of agency banking in Nigeria?
The comparatively low barrier to entry for agency banking in Nigeria is a key facilitator. Agents used to be portrayed as specialized financial services providers in their communities, but these days, anyone with a store can act as an agent for a bank or a mobile payments provider. Possessing a point of sale device, a lot of mom-and-pop stores and informal traders, among others, are acting as agent outlets. 30% of Nigerian agent outlets are specialty stores, while over 60% run them in addition to their regular business, according to an EFInA study published in June 2020.
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Also, regulatory support from the Central Bank of Nigeria has played a significant role in promoting agency banking. The central bank has introduced guidelines and policies aimed at fostering growth in this sector and encouraging financial institutions to embrace agency banking. These policies have helped to create a favorable regulatory environment, making it easier for banks to establish and manage agency networks. With clear guidelines in place, financial institutions have been more willing to invest in training agents, ensuring compliance, and expanding their agency network.
