Agency Banking is Bringing Financial Services to Low-Income Women

April 10, 2017

There is enough research to support the argument that women are better savers than men: they are more likely to be planning and preparing for their families’ future, including saving for their children’s schooling or other needs. Thus when considering the amount of un- and under-banked low-income women in the emerging markets, the issue is not one of demand. Yet globally, women are less likely than men to have a bank account. The real question remains: what is preventing them from having and using bank accounts? How can these obstacles be removed?

Take the case of Nigeria: we have been working with Diamond Bank for the past four years and early on we found that, even though nearly 73 percent of all Nigerian women are unbanked, 61 percent would like a bank account. And Nigerian women confirmed this for us on a recent trip to the country: women said that they wanted more services, faster! Effectively meeting this market demand requires addressing the challenges to access Nigerian women face, challenges similar to those faced by women in other parts of the world. Agency banking is one of the most promising solutions out there that can overcome these obstacles and finally give women access to the financial services they clearly want and need.

Women’s Banking Challenges


Shadiat Kareem, a new saver at Diamond Bank thanks to the BETA Savings program
Shadiat Kareem, a new saver at Diamond Bank thanks to the BETA Savings program

Women around the globe cite the same hurdles when trying to access banking services. One is distance and time: banks are located too far from their homes or places of work, and it can take hours to visit the closest one. Once at the bank, many clients often finds long lines and wait times–it can take several hours to get to a teller! Our visit to a bank in Nigeria reminded me of a day at the DMV in the US, only hotter. It was easy to see how clients would be reluctant to visit banks. Many women have to take care of their chores at home or attend to children, and can’t afford to spend the time traveling and waiting at to a faraway bank.

Second, many low-income potential banking clients are unable to pay the high fees attached to some transactions at banks. Low-income customers are usually only able to deposit a small amount at a time, so if a fee constitutes a big portion of that deposit, it makes little sense to make a deposit at all.

Third, some potential clients have issues with the complicated forms and documentation requirements involved with opening an account. Complex forms can be especially problematic for typically less literate low-income clients, especially women, who have lower literacy rates than men. The widespread lack of national ID in most emerging markets makes onerous Know-Your-Customer requirements an obstacle to banking this population, but it is an issue more acutely faced by women.

A fourth often-cited issue is the lack of trust with an unfamiliar institution. No matter what level of income, each one of us would prefer to hand over our money to a trusted friend rather than a stranger. In low-income communities unfamiliar with financial institutions, this sentiment is commonplace and quite prohibitive to formal banking services.

How Agency Banking Works

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“Agency banking” is a banking model where accessible “agents” (individuals in the community) process customer transactions on behalf of banking institutions, and it has emerged as a way to overcome the above-mentioned challenges. Its dispersed, mobile nature makes it an essential pillar of financial inclusion for low-income women.

Women’s World Banking is piloting two agency banking programs at Diamond Bank: BETA and CLOSA. In the BETA program, an agent visits Diamond Bank customers in a specific area daily to collect savings deposits. The BETA Friends, as these agents are called, collect the money and confirm the transaction via mobile phone. The CLOSA program, on the other hand, employs owners of high-traffic market shops to become agents of Diamond Bank. The shop owners receive devices to process transactions for visiting Diamond Bank customers, or to open up accounts for new customers.

Overcoming Challenges with Agency Banking

Both models are successful at resolving the main challenges that women faced in trying to access banking services. In the BETA program, there is no need to waste time traveling to a bank or waiting in line to see the teller: the agent will come directly to you! I only wish I could renew my driver’s license the same way. The CLOSA model was similarly convenient: the agents were located at shops frequently visited in popular markets. Clients who were out running errands and visiting shops anyway could easily stop by and make financial transactions on the way.

Both BETA and CLOSA incorporated features that while not exclusive to agency banking models, directly address the challenges women cited. For instance, both programs accept very small deposits and have low, transparent fees. These features encourage saving because customers aren’t penalized for having too little to save.

A brand new Diamond Bank customer showing off his stuff!Both models also make opening an account a very easy process, with no complicated document requirements or long forms. In fact, while we were interviewing one of the CLOSA agents to assess the pilot program, this young man came in to open his first bank account and was able to do so within minutes. He had hear about the agent in the shop from his brother earlier that day, and since the shop was close to his home he was able to easily visit and even more easily open up a bank account (even thought CLOSA was designed with women’s needs in mind, the example of this young man highlights that designing products to be more accessible to women makes them more accessible to men too!).

The issue of trust that many people faced with banking institutions was also resolved with agency banking. This can be especially critical for women, who might have cause to be more wary of and be vulnerable to strangers than men. In the BETA program, the agent was often a neighbor or friend from their community that they were already familiar with and trusted.

Similarly, the shop owners chosen to be agents of CLOSA were people the community was already friendly with and trusted. In both cases, agents can also customize the banking experience to each customer. They might know that their elderly neighbor might need more detailed explanations regarding their technical transactions.

Some of the agents at the sites we visited were especially dedicated. Beyond providing the transactions available to their clients, they themselves are advocating for more services to become available at their sites. One of the agents told us that some of his clients are parents who want to send money to their children at school in a different town, and wished he could provide that service for them. Working with agents that are already familiar to the community can provide a personal touch that might be missing at a bank that is far from the client’s neighborhood.

Foster Financial Inclusion with Agency Banking

Financial institutions that want to drive inclusive market growth must include agents in their distribution model. It’s clear in the increased uptake of banking services at Diamond Bank as well as in other institutions worldwide that agency banking is a promising solution to bringing more women into the formal financial sector.  I’ve seen it firsthand.