With the most branches in the rural and remote areas in Vietnam, Agribank plans to work with more places to bank the local people (Photo courtesy of Agribank) Agency banking is a type of branchless banking that allows traditional banks toextend their network of branches and services through authorised agents.
The model arrived in the country in recent years, especially since theGovernment issued the national comprehensive financial strategy in early 2020.
According to the SBV’s research, Brazil, Kenya, Mexico and India have all seenagency banking become an important tool to expand access to basic financialservices and promote financial inclusion. Five years since Brazil launched theagents, the network has served 12.4 million new bank accounts.
The state bank said in Southeast Asia, Malaysia's agency banking model uses thenationwide telecommunications network to expand the network of traditionalbanking services to customers in rural and remote areas at a low cost. Themodel also helps Malaysian banks save more than 80 percent of costs for settingup service points and 60 percent of transaction costs compared to thetraditional bank branch network.
Banks intrigued
According to the latest Comprehensive Financial Report of World Bank releasedin 2018, 69 percent of adults in Vietnam were unbanked and relied on cash whilethe rate in the world was 31.5 percent at the same time.
Meanwhile, the national strategy of financial services sets the goal to have atleast 50 percent of communes accessing financial service points and 80 percentof adults having transaction accounts at banks or other institutions by 2025.
Experts reckon the low rate of bank accessing in Vietnam is a big chance todevelop banking agents across the country.
By the end of 2017, the SBV piloted agency banking in rural areas with threemodels.
MB Bank work with Viettel services, PGBank with Petrolimex sales points andVietcombank with M_service Company, reaching 32,185 sales points.
More than 11 million transactions with a value of more than 81 trillion VND (3.49billion USD) were recorded among some 6 million customers.
Outside of the SBV pilot, LienVietPostBank took advantage of post officelocations to develop savings services, while Jens Lottner, CEO of Techcombank,shared the bank’s plan to work with Masan Group to take advantage ofconvenience stores to bring the bank’s financial products and services to awider population.
Between 2020 and 2025, Agribank plans to set up a network of banking agenciesand work with postal organisations, public administrations and microfinanceprojects to deploy low-cost, convenient, safe products for individual paymenttransactions.
Seeing the potential of the model, a SBV representative said there must be alegal corridor.
The SBV said completing the legal framework on agents was proposed in thenational comprehensive financial strategy) to improve the level of access tofinancial services for people.
The central bank said it was amending other regulations related to theoperation of the model, especially those on anti-money laundering/terroristfinancing, regulations on electronic money and know-your-customer (KYC)processes.
CEO of TPBank Nguyen Hung said such regulations would need to go into detail toguide the establishment of agencies to provide banking services, such asregulations on approved and prohibited services, criteria to become authorisedagencies and the form of operation.
Hung mentioned two main forms of authorisation used in Brazil known as fullauthorisation and credit authorisation, adding a fully authorised agent willprovide a full range of services from receiving and forwarding applicationdocuments for opening a payment account, savings account, deposit/withdrawaltransaction, transfer, payment as well as loan applications and opening creditcards. Meanwhile, a credit agency will only provide services on payment,borrowing and credit.
Taking another example of Bangladesh, Hung said authorised dealers can providecash withdrawal/deposit services, support for small loan disbursement and debtcollection/instalment, bill payment assistance, fund transfer assistance,balance queries, collect and forward applications for opening accounts, openingsavings, loans and credit cards. However, they are not allowed to approve thedecision to open card/loan accounts, conduct financial appraisals and conductforeign currency transactions.
According to another financial expert, it is necessary to clarify the qualityand capacity of organisations authorised to act as banking agents.
The agents must ensure that they meet all the standards of financial capacity,reputation, ability to meet commitments under adverse conditions, ability toprovide financial services based on technology and capacity of internalcontrol, security assurance and anti-money laundering./.
VNA
