Ugandan banks have been looking for a way to cut costs and scale as fast and deep as possible, just like mobile money. Luckily enough, they found this in Agency banking and mcash is positioning itself as the go-between these banks and the agents.
The service has worked well in the neighbouring markets of Kenya, Rwanda and Tanzania.
For example, in Kenya, by end of Q1 2016, there were over 40,000 bank agents. There were 17 commercial banks that had contracted 40,224 agents. These had facilitated over 170.5 million cumulative transactions valued at Ksh. 930.2 billion.
Compared to 2015, the results were tremendous. By the same period in 2015, 16 commercial banks that had 34,381 agents that had facilitated 149.4 million transactions valued at Ksh. 817.7 billion.
It is against this backdrop that Ugandan banks are looking at launching the service. So far, Equity, KCB, and Centenary bank have rolled out the service.
But Shamirah Kimbugwe, Head of Agency banking at mcash, confirmed that Stanbic and DFCU are set to launch the service, too. She confirmed that the two are “finalizing their pilots”. And very soon, the two leading banks in the country will be rolling out their agency banking services.
“[so far], we have successfully on-boarded DFCU and Stanbic bank,” Shamirah said. “We are currently finalizing their pilots.”
The pilots are being carried out in the banks’ respective branches before rolling it out for testing outside.
“We are in branch pilot phase and also in the final stages of integrations with Stanbic Bank Uganda,” Shamirah said.
Stanbic and DFCU are targeting at least three banks before the close of the year. “We want to see if we can bring on board a few other banks, but the strategy for this year is just three banks and that’s it,” Shamirah said.
Though she declined to divulge the details of the third bank, it is likely to be Barclays. Given it is already one of the banks the company has been offering its services to. The other clients in its portfolio include SafeBoda and Interswitch.
According to Shamirah, mcash is looking at being the go-between between the agents and the banks. A positioning that will see it lay the foundation for agency banking in the country.
“mcash as a company is positioning itself as an agent network manager,” said Shamirah. “What that means is that we are the go between the key stakeholders in agency banking including banks and the agent network itself as well as the customers.”
In this capacity, they’ll serve an “outsourced function to any bank seeking to roll out the service.” This will involve providing “the technical arm in both recruitment and managing agents as well as supporting the whole agent network system.”
Other services include technical support by servicing their hardware and back-end operations. “We help them in reconciliations, in commission handling, in float top-ups and float handling and so on and so forth,” says Shamirah.
Going by the current traction, one can anecdotally conclude that Equity Bank is leading the agency banking race in the country.
The bank is building its service in-house. Bench-marking on its expertise from Kenya and Rwanda. Centenary bank, too, is building the service in-house.
“We have a fair understanding of what they are doing and there is a likelihood that they are developing in-house,” Shamirah said.
Though, she “would so love that they outsource the function to an ANM [Agency Network Manager].” According to her, “there is better creativity and innovation around that channel” by using an ANM.
She argues that ANMs are able to cut costs as well as build the expertise because they work with various banks.
“We have lower costs when it comes to rolling out and also management as opposed to the bank,” Shamirah said.
Founded in 2011, mcash, a Ugandan fintech company offers Virtual wallets, Digital Payments, Mobile Banking, and Agency Banking Aggregation. One of the company’s solutions, MOBISMS, allows merchants to take payments directly from customer’s mobile phone