Agency banking

Agency banking is where a commercial bank appoints a third party (agent) to transact business on its behalf. The agent could be a petrol station, a supermarket, a permanent mobile money agent, a retail shop and hardware shop, among others. Those agents have the opportunity to share income with commercial banks especially on fees and commissions.
“You know banks make a significant amount of money from transactional fees. When you withdraw cash, the bank will charge you something.

When you pay your bill at a bank, the bank will charge you something. Agency banking is now making this cake shareable to many other players across the retail foot print,

In January 2016, Members of Parliament (MPs) adopted proposed amendments to the Financial Institutions Act (2004). Those amendments included the proposal for banks to adopt agency banking to increase access to financial services. At the time, several bank executives noted that the amendments would “revolutionise banking in Uganda because agency banking allows us to be everywhere.”

How agency banking works in Uganda

Bank of Uganda
Approves agents submitted by commercial banks.
Responsible for regulating commercial banks
Makes the regulations

Commercial banks
Enter into agreements with agents
Hold customer bank accounts
Supply agents with gadgets
Provide agents with float
Identify agents
Advance commissions to agents

Agents
Buy float from commercial banks
Carryout deposit taking and withdrawals
No exclusivity to one bank
Not employee of a bank

Customers
Access bank services from agent
No extra charge for using agent

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