In general, the model of bank agent is that banks cooperate with non-bank retail agents to provide financial services where banks do not have branches.
Comprehensive financial promotion
The research report of the Banking Strategy Institute State Bank of Vietnam (SBV) for this model shows that there are currently two models of bank agent in the world. One is the bank ownership model, in which a licensed financial institution, typically a bank, provides financial services through agents. It means that the bank develops and supplies financial products and services but distributes them through agents. The bank is still the provider of financial services, and is the manager and maintainer of customer accounts.
The other one is the model of non-bank ownership, which is similar to the ownership bank model, only differs in that the agency is a telecommunication/mobile network and executes transactions through customers’ electronic money accounts instead of their bank accounts.
Bank agents are considered one of the innovative distribution channels, expanding the access and use of financial services. Through agents that are usually grocery stores, pharmacies, post offices, and gas station, basic banking services such as bill payment, withdrawal/transfer, and savings are provided conveniently to people in remote areas where there is no commercial bank branch. Agent banking activities are considered the most outstanding initiative for achieving comprehensive financial promotion goals in many countries.
An expert points out Malaysia’s financial universalisation. Accordingly, the programme of developing the agency network for the Bank of Malaysia in 2012 is one of ten initiatives that have great influence in the framework of the Malaysian Financial Sector Development Strategy in the period 2011 2020 on approaching population without access to banking services.
The implementation of agent banking services has significantly expanded coverage, bringing financial services closer to the group of people who did not have access to banking services in Malaysia. At the end of 2016, the banking agency network reached 7,984 agents, 17 times the number of 460 at the end of 2011; More than 100 million transactions were made with a total transaction value of $2.1 billion. This model has enabled banks to save up to 80 percent of the cost of establishing service points and 60 percent of transaction costs compared to traditional bank branch networks.
Among various models of financial products and services in Vietnam’s comprehensive financial framework, the model of providing banking services through authorised agents is also set out. Accordingly, it recommends to pilot repayment of government debts through agents, and at the same time promulgate regulations guiding the provision of services according to the bank agent model.
Developing legal framework
According to Ondrej Sedlon, director of Air Bank’s global network development, one of the top conditions when it comes to promoting the development of banking products is customer centricity and banks’ strengthened system and infrastructure.
In parallel with that, banks must consider new ways and means to ensure better customer service; promoting the development of more distribution channels with diversified and convenient products and services such as financial consultancy and asset management for people, especially people in remote areas.
So far, Vietnam has three models of bank agents deployed and put into operation. Specifically, Military Joint Stock Commercial Bank (MB) cooperates with Viettel, which allows customers to deposit into accounts opened at MB or other banks, withdraw money from accounts opened at MB, transfer money to accounts opened at MB or at other banks, and transfer money to recipients by ID card.
The cooperation between Petrolimex Group Joint Stock Commercial Bank (PGBank) and Petrolimex allows PGBank to use the network of enterprises, branches, and member companies of Petrolimex to provide money transfer services to recipients who do not have an account at PGBank (by ID card/Passport) and transfer money to recipients with PGBank accounts (deposit into an account opened at PG Bank).
Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) cooperates with M_Service to deploy small value money transfer service based on MoMo e-wallet platform.
Regarding the development of bank agent model in Vietnam, most experts agree that it is necessary to build a legal framework for the model of bank agent which regulates at least some issues such as: the concept of a bank agent; minimum conditions to become a bank agent; banking/financial services that a bank agent can provide; roles, responsibilities, and obligations among bank agents, managing banks, the SBV, and customers; monopoly between managing bank and bank agent; fees between customers and bank agents, between bank agents and managing banks; and limit of transaction value for each service provided by a bank agent.
In the coming time, the SBV will issue a Decree on non-cash payment, including contents relating to the authorisation of bank agent model as a payment channel. Along with the legal framework guiding the operation of this model, it is also necessary to study, modify, and supplement the relevant contents in other legal documents to facilitate the operation of this model. In particular, the SBV as a managing agency should study and soon submit to competent authorities to issue documents guiding the opening of accounts by level and customer authentication on a digital platform.
Recently, Standing deputy prime minister Truong Hoa Binh assigned the Ministry of Public Security to concentrate on building a national database on population for operation and exploitation in 2020; coordinate with the government Office, ministries, branches, and localities to complete the synchronous infrastructure system, connect and share citizen data to serve the settlement of administrative procedures and online public services.
“This will be the foundation for the development of innovative financial service supply channels, including the model of bank agents,” said one expert.
