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Value of agent banking increases by Shs2.1 trillion
Agent banking has experienced rapid growth deepening financial inclusion. Photo / File
What you need to know:
- Value of agent banking increased by Shs2.1 trillion Shs4.7 trillion in January to Shs6.8 trillion
Money transacted through agent banking grew from Shs4.7 trillion in January to Shs6.8 trillion, emphasising the shift away from traditional methods of banking.
In details provided by the Agent Banking Company, Mr Richard Jable, the chief executive officer, said between January and July, the value of agent banking under the company had grown by 3.6 percent to Shs6.8 trillion, which is a testimony to the shift that has seen a number of people move from banking halls to digital platforms.
Mr Jable also indicted that during the same period, the number of agents under agent banking had grown by about 18 percent to 11,000 from 9,200, noting that the growth could have been spurred by an increase in public trust and steady growth in financial inclusion, much of which has been facilitated by digital platforms.
Agent banking largely conducts banking on behalf of financial institutions, ensuring end-to-end transactions, such as deposits and cash-outs.
Banks in many low- and middle-income countries have also turned to low-cost business models, such as retail agent outlets or banking agents, to broaden financial access in geographical areas not reached by bank branch networks
The Agent Banking Company was established in 2017 by Uganda Bankers Association.
Growth in online transactions
A number of commercial banks, including Stanbic and Equity have previously indicated that there has been a large shift in their operations with at least more than 95 percent of their transactions now conducted through digital and online channels.
As an alternative to bank branches, agents represent physical access points that enable customers to make deposits, withdrawals and money transfers, and to repay loans.
Mr Jable said that usage of agent banking services had increased, partly due to provision of other services beyond cash transfers, among which include payment of statutory obligation such as NSSF and utility bills of Umeme National Water and Sewerage Corporation and payment of school fees.
Currently, there are 19 commercial banks on the shared agent banking platform operated by Agent Banking Company, while other banks such Equity operate separate and own-operated agent banking platforms.
Mr Jable said agent banking activity has grown in excess of 20 percent year- on-year to July, noting that there are plans to open up the agent banking platform to microfinance deposit taking institution to increase product innovation and service offerings.
