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18 Pages·2014·1.52 MB·English

The Agent Banking Revolution: Extending Banking Reach
Malaysia’s Experience
Seminar on Agent Banking: Expanding Access to Payment and Remittance Services
Achievements and Opportunities,
Brazil, March 12-14 2014
Kamisah Abd Kadir, Deputy Director
Development Finance and Enterprise
Bank Negara Malaysia
12 March 2014 0
3/13/2014
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Measures implemented to build an inclusive financial sector in Malaysia in the
past 13 years
Pillars Measures Key improvements
Pillar 1: 1 . National Sustainable Microfinance Framework
Financial Service 2. Transformation of Credit Guarantee Corporation (CGC) 1 Outreach
Providers 3. Strengthened role of Development Financial Institutions Increase from 2000-2013
(DFIs) Branches per 10,000 adults
1.5
1.1
Pillar 2: 4. Guidelines on shared banking services
Distribution Channels 5. Banking services in every district and sub-district
End 2000 End 2013
2 Take-up of deposits
Pillar 3:
Banking Products & 6. Basic banking services and products Increase from 2000-2013
Deposits accounts per 10,000 adults
Services
32,846
7. Guidelines for Consumer Education and Protection
19,738
8. Integrated Contact Centre (BNMLINK, TELELINK, SME
Pillar 4:
Advisory unit)
Financial Literacy,
9. Credit Counselling and Management Agency (AKPK)
Advisory & Awareness 10. Small Debt Resolution Scheme (SDRS) End 2000 End 2013
11. Financing Help Desks at Associations/Chambers via
‘Train the Trainers’ 3 Take-up of loans
Increase from 2000-2013
Loans accounts per 10,000 adults
Pillar 5: 1 2. National SME Development Council
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Supporting Financial 13. Central Bank Act 2009: financial inclusion as primary role 8,673
Infrastructure 14. CCRIS (credit registry) and Credit Bureau Malaysia 3,105
End 2000 End 2013
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Framework under the Financial Sector Blueprint (2011 – 2020) to further enhance
financial inclusion
Vision

A financial system that best serves all members of society, including the underserved, to
have access to and usage of quality, affordable essential financial services to satisfy their
needs towards greater shared prosperity
Desired
Convenient Responsible High
outcomes for the High Take-up
accessibility usage satisfaction
underserved
Innovative Well informed and
Strategic Innovative Effective FIs and
1 2 4 products and 4 responsible
channels infrastructure
outcomes services underserved

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financial i. Agent banking iii. Structured vi. Flexible micro- ix. Financial literacy
inclusion training programmes financing via mobile LINK
ii. Mobile banking
and partnerships
strategies iv.Holistic vii. Contractual micro-
monitoring framework savings product x. Leverage NGOs
v. Strengthen role of viii. Micro-insurance/ for capacity
specialised DFIs takaful roadmap - building
in financial inclusion short, medium & programmes
long term
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Continuous monitoring & evaluation framework
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It all started in Belaga…
• Belaga is a small district in Sarawak of
East Malaysia with population of above
37,000. The main economic activity is
logging

• The nearest town where banks are available
is about 100 km away i.e Town Bintulu, 6
hours away via gravel road or 5 hours by
river.

• Accessibility to Belaga is an issue for the
banks to open a branch.

• Dependent on their heads of community or
3
friends to do banking on their behalf.
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Agent Banking: Case for change
Challenges faced leading to introduction of agent banking in year 2012
Challenges
Branches and ATMs per 100,000 adults in Malaysia compared with high income countries
2009
1 Lower physical
outreach compared 94
to high income
32
countries1,
High income countries
concentrating in 53
15
Malaysia
urban area 32
15
Branches ATMs
Percentage of sub-district with a population of ≥2,000 with & without access points in Malaysia
2 At sub-district level, 2011
about 54% of sub- % of served sub-district by state
districts with
KL 100.0 0.0
≥2,000 population Labuan 100.0 0.0
in Malaysia are yet Sub-district Sub-district Putrajaya 100.0 0.0
Sabah** 100.0 0.0
with access without
to be served2 Selangor 67.3 32.7
points access points Johor 55.3 44.7
(Served (Unserved Sarawak 53.4 46.6
Perak 52.6 47.4
mukims) mukims)
Perlis 52.4 47.6
46% 54% N.Sembilan 52.3 47.7
Penang 43.5 56.5
398 mukims 449 mukims Melaka 42.6 57.4
Kelantan 36.4 63.6
Terengganu 32.5 67.5
4
Pahang 31.7 68.3
Kedah 31.2 68.8
(50%)
Total sub-districts with ≥2000 population: 838
Ave. population per sub-district: 24,000 (0 – 533,000) ** Sabah’s lowest admin. area is a district
3/13/2014 Source:
Source: BNM 41 Financial Access Report 2010, CGAP & FICPS.

2 Mapping exercise by BNM, 2011 & Jabatan Perangkaan Malaysia (DOSM 2000)
Agent Banking: Case for change
Agent Banking has high potential to enhance outreach to unserved at lower costs
1 Increased Outreach 2 Lower Costs
Cost of offering financial services through
Worldwide points of presence
≈28m
agent outlets vs. physical branches
• 2 Malaysian FIs
• Start-up cost: > 80% lower
≈1m
500k 665k • Transaction costs: > 60 % lower
250k
• Mexico: 25% - 50% lower
Western Bank Post ATMs Agents
Unions Branches Offices
Source: 2FIs, McKinsey (Global Financial Inclusion) 2010, CGAP
Source: CGAP
3 Contributes to e-Payments agenda
Global experience
• Brazil : >160,000 agents
• Mexico : >22,000 agents
• Kenya : >16,000 agents
• India : >15,000 agents 5 Increase # of debit Increase # of
• Malaysia : 460 agents cards terminals
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Agent Banking: Regulatory framework in Malaysia
Guidelines on Agent Banking in 2012 to facilitate the implementation of agent
banking in a reliable, safe and sustainable manner
Guidelines on Agent Banking outlines the minimum regulatory expectations for FIs as well as
encourages cashless transaction & use of system that promotes open access
• Emphasis on unserved areas
• Real-time transaction & within premise only
Agent
• Basic banking services - deposits, cash withdrawals, fund transfers, bill payments &
banking
loan/financing repayments
services
• Prohibited services – opening of bank accounts, money changing activities & loan
appraisal
• FIs retain ultimate responsibility of all agent banking risks & activities, including
Oversight &
technology risk, agent management, security, operational risk, customer protection
governance
Agent • FIs must conduct Know-Your-Agent & agents must have existing business
Selection,
• Agents to comply with relevant legislation including secrecy provision
Conduct,
• Agent contract, monitoring & supervision mechanism
Monitoring
Customer • National agent banking logo 6
protection, • Dispute resolution mechanism
awareness & • Database on agent for public verification
education
• Agent banking awareness programme
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Agent banking: Key achievements to date
Agent banking enhances outreach of financial services to the underserved
in a more cost-efficient manner
Before After
46% mukims served 92.5% mukims served
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End 2011 End 2013
Served sub-districts Unserved sub-districts Served sub-districts Unserved sub-districts
Population:
2010estimate
• Peninsular: 23.0m
• Sabah: 3.3m
• Sarawak: 2.6m

17 cash in & cash out access points per 100K adults 40 cash in & cash out access points per 100K adults
2
Financial access point by type, end 2011 Financial access point by type, end 2013
5,474
3,143 3,603 cash in & 7 8,700 cash in &
3,226
cash out access cash out access
460
points nationwide points nationwide
Branches Agent banks Branches Agent banks
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The underserved can conduct business in familiar environment
Agent banking by 3 FIs
Number of Agents
5,474 banking agents
nationwide, mainly in
rural areas
Transactions by Agents
>13.9 million transactions
worth >RM1.6 billion
(USD495 mil)
↑ served State Legislative Reps
From 94% (end-2012) to
8 99.8% (575)
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Synergy between agent banking and microfinancing
• Agent banking boosts up his almost
dying business – more new customers

• Microfinancing helps him to expand the
business

• Agent banking commisions help to pay
his microfinancing loans.

• Top performer agent in suburb Kuala
Lumpur
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