The Business Case for Branchless Banking – What's Missing?

This MicroSave Briefing examines the problems that prevent branchless banking from becoming sustainable and profitable. Branchless banking is not sustainable despite world wide increase in active users. The paper states that current models are unlikely to solve this problem.Banks and regulators seldom pay attention to the three factors necessary for the success of branchless banking, namely, new and active accounts, optimal technology pricing and collaboration, and a highly motivated agent network. Problems in branchless banking include:

• Business from the middle class and dormancy in smaller accounts make banks unwilling to take up branchless banking;
• Regulations in most countries do not allow mobile network operators (MNOs) to offer financial services that would help them increase volumes and minimize churn;
• Branchless banking does not contain bank-grade security systems that would prevent authentication, fraud, and other accountability issues;
• Agents complain that revenues do not compensate for costs, time away from core business, and the extra sales effort and expertise required;
• Agents also face problems of liquidity management and feel controlled by banks.

For branchless banking to work well, agents must feel more valued and banks must be willing to share risks, and rewards, with MNOs.