Bank Agents: Risk Management, Mitigation, and Supervision

Guiding managment and supervision of bank agents

This Focus Note draws on the experiences of supervisors in several countries where branchless banking and the use of agents is flourishing to provide evidence and analysis that may be useful to supervisors in their development of an approach suitable to their supervised institutions. The use of bank agents has the potential to significantly increase financial access by poor and underserved populations to a range of formal financial services, including savings, payments and transfers, and insurance.

The Note states that although a number of countries (e.g., Colombia, Pakistan, Kenya) have issued regulations defining the terms and conditions of using bank agents, there has not been any global guidance to supervisors that directly addresses how best to supervise such use and whether and how to supervise agents themselves. It discusses:

  • Different activities (and related risks) in which bank agents may engage;
  • Bank management and mitigation of agent-related risks in the context of a fully developed bank agent business;
  • Different approaches to licensing and supervision of bank agent businesses;
  • Possible corrective measures that supervisors may take with respect to a bank agent business based on research as well as general principles of bank supervision;
  • Cost of supervision.

About this Publication

By Lauer, K., Dias, D. & Tarazi, M.