Kenyan fintech firm delivers a 1st in Africa
Over the Last 10 Years, Banking has changed from being about visiting the bank to being the act of performing a banking transaction, wherever you are.
However Financial inclusion still remains a key challenge in Africa. Agency Banking enables banks to extend their services affordably through a branch network of authorized agents. Eliminating the key reason most of the unbanked rural populations do not have an account.
Eclectics International, a Kenyan owned Fintech company, has been commended for successfully developing and deploying a proprietary Shared Agency Banking Platform in Uganda.
Launched in May 2018 as an initiative between Uganda Bankers Association and Bank of Uganda, the initiative aimed to expand financial inclusion by extending financial services to the under-banked and unbanked population, mostly in the peri-urban and the rural villages. This effort saw the number of bank account holders in Uganda increase from 7.4 million in 2017 to over 13 million by January 2021.
The Shared Agency Banking Platform was recognized by the IFC and the World Bank as a first in Africa. It has also been rated as the Best Regulated Agency Banking Platform in the continent.
In Uganda, the Eclectics Agency Banking Solution now powers over 1 million monthly customer transactions of more than USD $160million monthly. These include Cash Deposits, Withdrawals, Bill Payments, School Fees Payments, Social Security & Local remittance fees.
Mr. Paul Mbugua, the Group CEO and Founder of Eclectics International, explained that Shared Agency Banking is the use of technology to enable the banked, under-banked and unbanked population to access financial services using a shared platform. In this case, instead of each bank in Uganda deploying their own exclusive agency banking platform, they opted for a shared platform.
An application is installed in one central place and use common physical infrastructure (servers, power, network and devices), which in this case, the POS terminals, or mobile phones are used by bank agents distributed across the country. This means that any bank customer from the 24 commercial banks in Uganda can visit any agent and enjoy financial services such as cash deposits, cash withdrawal, account opening, transfer of funds, cash bill payments among others. Each of the 24 banks has an agent banking transactions and system monitoring portal, executive dashboard, analytics and comprehensive reports.
Highlighting the magnitude of the project, Eclectics MD, explains. "Just to give you a highlight, the overall project was to integrate the Shared Agency Banking Platform with the Core Banking Systems and switches of each of the 24 banks. Integrate to almost a similar number of Card Management Systems and integrate also to the Telcos. In each of the four Telcos, we had to integrate with their; USSD platform, mobile money cash in & cash-out, which are two different APIs, SMS among other services they offer. In addition to more than 20 billers in the country government systems. Even if we had a near ready product, the biggest job was the integration, which is part of the onboarding in any bank.
Remember some of these banks are multinationals. They rely on international standards to allow any of their data or systems for any of their customers who use their platforms.”
Through the Development Partner FSD Uganda, 15,600 agents were rolled out across the country. In contrast there were only 546 Bank Branches in Uganda by 2017 and the banking sector employed about 11,000 people, then. The agents attend frequent workshops and trade show camps across the country where they are trained how to do banking on behalf of the banks, treat customers and manage risks.
Eclectics is working on the next phase; which will entail rolling out of micro-insurance, merchants’ ability to pay using electronic money and local remittances. Accessing the elderly, and refugees and enabling them to do banking without having any education or any need for technology or National ID by using biometric and QR payments for those that want to make payments in the platform.
We have various emerging markets across the continent expressing interest in the shared platform. These are Kenya, Rwanda, GIM-UEMOA region that hosts eight Francophone countries in West Africa and Zambia (where we are currently live in three banks), Paul - Eclectics MD notes.
He advices countries that are interested in the Shared Agency Banking platform to;
Firstly, have a common expectation of the platform. In order to reduce time and effort spent being audited by individual banks. The banks could select an independent audit firm that would represent their interests.
Secondly, is to eliminate the receipting requirement for Bank Agents, which is mandatory in some countries. Telcos however, do not require receipting i.e. physical receipt. Therefore, a Safaricom MPESA, MTN shop, or Airtel Money agent will use a basic phone, but bank agents must use a POS terminal with physical receipts. This is a barrier to the number of POS terminals that any institution can rollout. A phone that costs USD 50 - USD 100 versus a terminal that cost about USD 500 is equal to 10 times the cost of laying infrastructure.
Eclectics is Pan African company founded in 2007. Building affordable innovative technology solutions, serving over 260+ financial institutions and other corporations. Across 25 countries in Africa today and growing. Served by a large team of 207 employees, headquartered in Nairobi.