The Financial Brand published a story last week regarding the complexity involved in supporting banking solutions for the underserved. It highlights several themes covered last year in Mercator’s report, Delivery Models and Channels Serving the Financial Underserved found here. This has become a topic of conversation again, in light of Bank of America’s decision to eliminate their eBanking product. More on the B of A decision here. Part of the solution as described in this article is to continue to support functionality through economical technology, but also support activities through the use of retailers’ and other partners’ physical locations:
Agency banking has dramatically changed the economics of extending banking services to rural and semi-urban areas, bringing the underbanked and unbanked into the formal banking sector. The model entails combining digital and physical engagement using third-party retail agents to act as a proxy bank … thereby making banking services easily accessible to consumers of all economic means.
Agency banking allows traditional banks or other financial services providers to reduce fixed costs and encourage consumers to use banking service more frequently, thereby providing the potential for additional revenue sources for both the bank and the agent. This, in turn, improves the economics for traditional providers compared to branches, especially for high-transaction, low-balance accounts that are common among less affluent users
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
Read the quoted story here
