In recent years, with the continuous development of technology and the trend of branchless banking, the agent banking model had been established and developed in many countries.
Banking agents were business entities providing financial services to customers instead of licensed credit institutions providing payment and deposit mobilisation services. Bank agents could be post offices, pharmacies, grocery stores, electronics stores, and so on.
The bank agent model helped reduce operating costs, the cost of establishing traditional branches, increasing access, and frequency of use of financial services, including low-income customers and rural areas, remote areas.
Besides, bank agents also created additional income for agents from commissions and increased the number of customers. More importantly, this model contributed to promoting comprehensive national finance.
In Vietnam, most of the bank’s transaction points concentrated in urban areas. People in rural areas mostly transacted via Vietnam Bank for Agriculture and Rural Development (Agribank) and Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank) networks. Hence, the ability to access banking services in this area was still low.
Facing that fact, the State Bank of Vietnam (SBV) had piloted the development of non-cash payment in rural areas during the period from 2014 to 2015, with three models of bank agents, namely Military Commercial Joint Stock Bank (MB) and the Military Telecom Group (Viettel); Petrolimex Group Commercial Joint Stock Bank (PGBank) and Vietnam National Petroleum Group (Petrolimex); Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) and M-Service Company.
By the end of 2017, this pilot programme achieved some initial results. Accordingly, the number of service points in all three models reached 32,185, an increase of 1.4 times compared to 2015. The number of customers reached more than 6 million, an increase of more than eight times compared to 2015, of which the number of customers in rural and remote areas accounted for nearly 60 percent of the total number of customers. The total number of transactions reached more than 11 million, and the entire value of transactions reached over 81 trillion dong.
However, the operation of bank agents also encountered many difficulties when the legal system for this activity had not completed. The potential risk was higher than the traditional bank branch model.
To promote the development of the banking agency model, SBV was considering adding regulations on payment agency activities to the Decree replacing the Decree No. 101/2012/ND-CP of the government on payment method without cash.
From international experience in developing banking agent, the writer proposed some suggestions for improving this model in Vietnam as followed.
Firstly, it was necessary to clarify the scope, subjects of application, other relevant legal documents, concretise the operation of banking agent models.
Secondly, stipulating requirements for business entities when registering to become a bank agent based on the contract signed between the bank or financial institution and the bank agent, conditions for re-signing, term and termination of bank signing contract were also essential, as well as the appropriate tax regulations aiming to encourage the development of this model.
Thirdly, to protect the interests of customers, it was necessary to specify the operation of the banking agent, including the bank’s obligations and responsibilities, and transaction limits to restrict the use of cash. It was necessary to train bank agent staff, in particular those that were allowed and strictly prohibited by bank agents, information technology requirements, etc. Besides, activities of inspection, examination, and supervision, as well as handling violations of functional agencies regarding the operation of banking agents, sending annual reports and ensuring the timeliness and accuracy of the report, were also required.
