How can agency banking be a transformative driver for digital financial inclusion?


For any nation to ensure inclusive development of its economy, the most essential factor is its local sustainable development. In recent times, developing economies around the world have prioritised sustainable local development efforts in order to boost their economies. Central government bodies, local government entities and financial institutions contribute significantly in ensuring continued development for all areas of the economy and their population. While governments are responsible for improving infrastructure in all areas of the economy, financial institutions play a key role in leveraging support by facilitating financial sector development, thereby contributing to higher economy-wide productivity.

Financial development advances human development, and access to financial services improves people’s lives – especially lives of the impoverished. Financial development reduces income disparity while increasing earnings. As a result, financial sector reforms that increase financial inclusion have been a globally important objective. Issues of financial development have culminated in an increased number of initiatives by central banks, international agencies including the IMF, World Bank and non-governmental organisations including the Bill & Melinda Gates Foundation, Consultative Group to Assist the Poor (CGAP) and the Alliance for Financial Inclusion (AFI) to promote the well-being of the global poor and disadvantaged.

As of 2018, the World Bank estimated that 1.7 billion people worldwide lacked access to financial services, notably savings and credit. Financial exclusion implies denial from all types of financial intermediaries including banks, microfinance institutions, financial advisors or brokers, insurance companies, collective investment schemes, among others. The data indicated that the level of worldwide financial exclusion was mainly contributed by populations living in Africa, Asia, Latin America and the Middle East.

In particular, a majority of the continents’ population lack access to and use of financial services, limiting their ability to contribute to the economy by preventing them from accumulating money or obtaining credit for production and consumption. The consequences of financial exclusion can include exclusion from other mainstream services, such as pension schemes, and can also lead to debt and/or disconnection from essential utilities. Thus, financial exclusion present a far-reaching impact on socioeconomic development.

Achieving financial inclusion and security is a means to an end, not an end in itself. Inclusive finance is widely acknowledged as essential for poverty reduction and inclusive economic growth. As a result, financial inclusion has consistently been highlighted as a key enabler of the Sustainable Development Goals, predominantly the SDG 1 and SDG 10. Based on the aforementioned, financial inclusion policies have continually piqued the interest of academics, politicians, industry players and regulators. In particular, emerging economies have for a long time understood the social and economic imperatives for greater financial inclusion, and its significant contributions to economic development via developing new ways to empower the poor.

In Ghana, financial inclusion has seen historic progress and growth in the past decade.  While the growth story has been impressive, there continues to be a large number of the marginalised being excluded. The emergence of mobile money technology in the past decade has raised awareness of the need for financial inclusion; however, the pace of mobile money as a key driver of financial inclusion has been slower relative to Kenya and Tanzania.

Moreover, concerns in other dimensions bordering on confidence and deepening of financial services continue to persist. That is to say, the country has a long way to go in mitigating raging issues like low levels of inclusion, particularly in the SMEs space, coupled with incoherent strategy to address these challenges and coordinate efforts. To fight this grim reality, successive governments have over the period embarked on belligerent interventions – including the recent National Financial Inclusion and Development Strategy (NFIDS) to eliminate the blocks to inclusion.

At the front of financial inclusion efforts in Ghana has been Fintechs and Telcos. According to the Bank of Ghana, 38.9 percent of the population (aged between 15 years and older) had registered mobile money accounts transversely among the three leading mobile money operators in the country as of January 2021. While having made some progress in the financial inclusion drive in the past couple of decades, the country still faces challenges in achieving sustainability, affordability and comprehensiveness with this drive.

The efforts of these entities have left gaps, with some adult populations being underserved. This has prompted the introduction of agency banking to form the fulcrum for driving inclusiveness in the formal financial system and deepening financial services. The introduction of agency banking has stamped banks as being the most crucial enablers of financial inclusion in the economic jurisdiction.

Certainly, universal banks in Ghana during recent times have been threading an analogous needle to enhance inclusion through agency banking. Agency Banking Solutions are projected to mitigate the supply side processes which preclude poor and disadvantaged social groups from gaining access to the banking system. To clarify, this measure is aimed at ensuring that availing banking services can be utilised by all in a cost-effective manner.

The regime of agency banking service has formed part of strategic banking models to expand the services by eliminating the need to operate brick and mortar branches. This is observed to be broadening the horizon for banks in the jurisdiction to also serve customers efficiently – not to mention that banks have adopted this solution to bring branches to their consumers and provide services at their doorsteps via agency banking.

This is serving to bridge the gap regarding lack of inexpensive banking services, which is cited by over 59 percent of unbanked adults as the primary reason for their lack of holding an account. In effect, the system provides room for banks to create new accounts, apply for loans and much more from a distance. The Agency banking solution can also be used to implement all required and value-added services.

Expanding the scope of banking in the rural sector has culminated in an increase in the significance of agency banking. Agency banking has increased the reach of financial institutions at minimal cost while enhancing inclusion in the formal financial system. In this sense, it has become key to establish how and to what extent agency banking solutions can support financial inclusion. Agency banking and rural development have become inextricably bound. It has become a tool in facilitating continual development of remote rural areas and their populace.

In a pandemic era, the role of agency banking has been magnified. Agency banking started by various banking institutions is complementing other forms of digital payment systems to form the financial deepening backbone of the country. The medium, along with other digital payment systems, served as the fulcrum in spurring economic activities during the lockdown, particularly with its convenience and easiness. In a digitised world, social distancing was not going to be an impeding factor to disrupt financial transactions. The period was characterised with an amplified acceptance of agency banking services.

Recognition by policymakers of the importance in supporting remote financial service is prime. The implication for embracing the agency banking solution is the great potential for unbanked households to leapfrog directly to sturdy financial services. Indeed, at the peak of the pandemic, universal banks served and onboarded clients through alternative channels. Agents adopted protocol precautions to operate in a safe environment when positive cases began to emerge. A high percentage of average daily active agents were still working far into the lockdown, serving as a primary avenue for cash-in and deposit mobilisation. As a result, electronic payments rose 81% in the first quarter 2020 and by 103% by the year end, of which bank transfers through agency banking solutions contributed the bulk of growth.

In view of the aforementioned, it is realised that with the emergence of a new normal wherein social distancing has become the new order, coupled with the statistic of 42 percent of adult Ghanaians not having a formal financial account (CGAP, 2020), it has become imperative for agency banking solutions to be aggressively rolled out as part of Digital Payment Policy to ensure a more enabling environment for remittances, e-commerce and contactless merchant and utility payments among all segments of the economy.

Through empirical observation, Fidelity Bank – which was first in the jurisdiction to be granted an agency banking licence by the central bank – was recorded to have enabled over 1.5 million low-income consumers to have access to some form of banking services.  The formative agency banking solution promulgated by Fidelity Bank and FSD Africa has formed a blueprint for inclusive banking and financial deepening of digital payment alternatives.


The wave of agency banking solutions is turning out to be a game-changer in the financial inclusion drive. The strengthening of effort in terms of enlightening the populace about financial products and removing all barriers encountered in the roll-out of agency banking should remain paramount. The intensified roll-out of the agency banking scheme implies regulators and policymakers must stringently quicken the processes of digitalisation that will ensure a transformative business environment which propels universal access to financial services.

This implies deliberate implementation of the 2020 Digital Financial Services Policy, which emphasises digital financial inclusion. An eKYC would play a critical role in the onboarding of clients to join the formal financial system. This effort should be enhanced without any compromise on Anti-Money Laundering and Countering Financing for Terrorism (AML/CFT) regulations. In sum, government is advised to be deliberate in its implementation of the National Financial Inclusion and Development Strategy (NFIS).

Banks all across the world are being transformed by the advent of agency banking models, and it will be interesting to watch how big of an influence it has on the banking business in the near future.


MacNamara Peter-Brown is a PhD student with research interest in banking, financial sector development, financial Inclusion and Sustainable Development. The author is involved in projects examining the nexus between financial inclusion and sustainable development. He’s worked extensively in mainstream investment banking and retail banking. He holds a postgraduate degree in Economics and a Bachelors in Development Planning.


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