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Commercial banks embrace agency banking for financial inclusion

Mweheire hailed role of agent banking

Kampala, Uganda | THE INDEPENDENT | The banking sector has had a rapid expansion in Agency Banking hardly a year since Bank of Uganda issued Agency banking regulations. The sector according to Uganda Banker’s Association now has over two thousand agency banking agency compared to the existing three hundred bank branches country wide.

Uganda Bankers Association Chairperson, Patrick Mweheire says Agency Banking is delivering financial services to the under-served and un-banked population in the country.

Mweheire, also Stanbic Bank’s Chief Executive Officer, says commercial banks have in the past months been migrating transactions that used to be in the branches to go to the agents.
He revealed that about twenty percent of Stanbic Bank’s transactions are now going through agencies spread all over the country.

Mweheire says the volume transactions through Agency Banking are expected to increase once the banks activate other modules like School fees payments and other utilities like water, electricity and others.

The Agency Banking model was one of the innovations with the 2016 amendment of the Financial Institutions Act 2004. Bank of Uganda in 2017 issued the Financial Institutions (Agent Banking) Regulations which introduced agent banking as a new delivery channel for offering banking services.

With Agency Banking, a third party, an agent, can provide bank services outside of bank offices. Providing services through agents grant banks access to an untapped market potential; rural communities.

Studies had estimated that over nine million adults in Uganda needed to travel more than an hour to access a bank branch. With Agency Banking, the gap is likely to reduce further to enable thousands of low-level income households access to financial services.

Unlike the traditional banking hall where a teller is only available within the strict banking hours, agents – mostly the outlet owners – normally offer flexible time schedules even though they provide a limited range of financial services.

Stanbic Bank’s Head of Corporate and Investment Banking, Emma Mugisha told URN that there is compelling evidence that Agency Banking is changing the landscape for financial inclusion.

She says the Agency Banking is equally reducing operating costs and risks to the Commercial Banks. The Banks according to Mugisha may not have to invest in opening up more branches once the Agency Banks are fully operational.

She says lines at Stanbic Bank Automated Teller Machines(ATMS) are also reducing in areas where customers are able to use the Agency Banking services alongside other innovations like mobile banking.

The banks have Shared Agent Banking System that enables connectivity between member banks to enable

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