Despite any reservations, agency banking is undeniably a transformative force in the financial services landscape. It’s not just bridging the gap between traditional banks and the unbanked populace; it is reshaping the entire banking experience. 

The financial industry aims for a digital future with a cashless society. Still, cash is king in Africa, so there is a large gap between the high demand for banking services and the limited availability of banking infrastructures. Hence, the current cash-based reality must also be addressed. Traditionally, this meant offering cash through bank branches and ATMs, but the demand was still unsatisfactory. This gap has led to the rise of agents providing financial services across Africa.

Earlier, on the 16th of this month, a netizen with the handle @fozadoza  on the popular X social media site started an interesting discourse about her experience using the POS in one of her posts.

She says, 

“How did this nonsense POS system become the norm? There’s never money at the ATMs, I am buying my own money back from POS. Makes absolutely zero sense.”

From the post above, we can deduce that Fozadoza ascribed cash scarcity to agency banking and rebuffed the growing industry’s importance.

While this is not to downplay her experience, it is important to note that before the revolution of agency banking, people have always called out the functionality of  ATMs. Hence, agency banking did not introduce the disappointment of not getting any money when you urgently need some at the bank. Instead, it had reduced the frustration and the long wait hours.

Of course, since nearly 51% of Nigerian adults use the POS for banking transactions, as expected, Fozadoza’s post garnered many mixed reactions, from which we will share the salient points made in the comments by other X users;

1. Easy Accessibility: Many places still lack bank branches or ATM stands due to factors like the cost of setting them up. Agency banking comes to the rescue for people in these areas to access financial services. The burden of travelling long distances and waiting a whole day to withdraw or deposit cash is eliminated at a very affordable cost. This set of people would have a different opinion about agency banking, as commented by @bruziee…

Money agency is not nonsense as ATM is luxury in some places and financial services have to go on. You don’t have to use their service too as you can walk into banks to withdraw free of charge.

Another comment by @BusayoOtebata reads;

If we are being honest with ourselves, you’re directing your anger to the wrong people because POS agents are like the fastest and go to when you need urgent cash, most especially in areas that don’t have banks.

2. Enhanced Convenience: Agency banking brings financial services to your doorstep. Agents are everywhere, such as streets, bus terminals, markets, airports, and campuses. They go through the stress of securing cash from banks and from local businesses to give you the convenience you desire at an affordable rate. Since banks charge you for using their ATMs, it is not strange that agents charge a token for transactions. 

@I_AmADEBOWALE commented that, 

The way una dey reason sometimes sef…Money brought closer to you at a cost to reduce your cost and stress, how is that “buying money”. If you want to enter bank and/or use ATM, you are free to do so.

@BlackOwl_47 added that, 

Except you live very close to the bank, say a walk away, but  if you have to transport yourself, say use a car or bike to and fro the bank ATM machine, and consider the cost compared to using POS around, then POS is a nice concept by me. 

3. Cash Scarcity Reduction: Unlike the narration, a few people would like to believe that POS operations did not cause cash scarcity but have significantly reduced it.

@AWholeSAlmanPR said, 

You should be happy POS is saving you from the scarcity. Because even these POS agents go extra length to get cash for their business.

@Jaynaija added that, 

POS people are not the reason for cash scarcity abeg. Imagine the days when there are long queues at the ATM, if not for POS.

4. Enhanced Cash Swap: The poster mentioned that she bought cash with cash. However, it should be noted that paying a fee to withdraw from the POS operators is similar to ATM/bank charges. The fee covers service maintenance costs, such as transaction processing and agent’s commission. 

In support of this, @suki_TD commented, 

But we pay to use other banks’ ATMs at some point. I don’t think it’s so distant, and it comes to you at a cost.

5. Collaboration between Banks and Agents: Under the post, @iamUceeofficial commented, 

Atp I really do believe the banks are in on this too. Very annoying.

 and @JardaniJovonovv added, 

Goes to show even banks are complicit in the very dysfunction in Nigeria.

 To correct this notion, agents rely on more than banks to source cash. Retailers deposit their money with POS operators at the close of the business instead of taking the risk of carrying the cash home. 

Our Take

At Kashzoo, we believe the success of agency banking remains in its ability to meet customers where they are and provide essential services in a familiar and convenient setting. As this model grows, it promises to democratise access to financial services, driving financial inclusion and encouraging economic growth in communities. However, agency banking will consider prioritising user experience and ensure necessary adjustments to enhance customer satisfaction.