Three Areas DFS Providers Prioritise to Enhance Agent Networks
29 Aug 2017

Nancy Kiarie

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Faculty Title: 
Manager - Digital Financial Services
External Contributor: 

Vera Bersudskaya

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Faculty Title: 
Quantitative Research Manager
External Contributor: 

Since its launch in 2013, The Helix Institute has offered evidence-based insights, practical training and technical assistance on agent networks to DFS providers across Africa and Asia. We asked providers to tell us what steps they have taken to improve their agent networks after engaging with The Helix. This blog sums up their actions, classified into three broad areas: 1) enhancing network size, distribution and make-up; 2) boosting service reliability, and 3) ensuring network sustainability.

1. Network size, distribution and make-up

To deliver on DFS deployment objectives, providers must get the right agents in the right places to serve their customers. The Helix trainings facilitate learning that helps providers review and refine their approaches to achieving the scale, reach and characteristics of the network best suited to support their deployment objectives.

  • Overhaul Agent Network Strategy: Eleven providers have overhauled their agent network strategies following The Helix training and exposure to peers from other markets. To respond to growing demands of managing and scaling agent networks, some opted to outsource the agent network management, while others adopted master agent models. Providers were inspired to let go of exclusivity clauses and guidelines on mandatory agent spacing (within a specific radius of each other), which has improved agent accessibility and increased transaction volume.
  • Strategic Agent Selection: Many DFS providers struggle with agent dormancy, which often stems from poorly targeted agent recruitment. Consultations with The Helix have driven 14 providers to refine their agent selection criteria to ensure their agents will actively transact. For example, providers have enhanced their geographic targeting to ensure agents are recruited from strategic locations and/or raised minimum start-up capital requirements to boost agent liquidity. Others through evaluating agent performance determined which agents do not add value to the network. In some countries, providers are now deactivating non-performing agents in an effort to streamline their networks. This is remarkable since in the past providers were reluctant to reduce agent numbers, viewed as a manifestation of scale.
  • Mandatory Agent Training: Research by The Helix has shown that trained agents perform better than their untrained counterparts. Our courses further emphasise topics essential for agent training. At least 14 providers reviewed their agent on-boarding approach: those who previously had no training structures have set up training departments to handle agent training needs; others have formalised agent training curricula and created training of trainer manuals. Providers came up with creative ways to identify gaps (e.g. by tallying agent call centre issues) and ensured curriculum included those issues. For example, several providers launched modules on fraud to increase agent awareness of the potential sources, prevention and mitigation measures. Some providers have encouraged agents to use social media as a platform for sharing their experiences and tips.

2. Service reliability

The success of digital financial services relies on how available, accessible and reliable they are to their customers. Without a reliable distribution channel, providers are unlikely to see high take-up and usage, regardless of the merits of their product design. A reliable service ensures customers are able to access DFS wherever and whenever they need it.

  • Enhance Liquidity Management: On the whole, float management is among the biggest hurdles in agent operations. Most financial providers in Africa have delegated the responsibility of managing float to agents. However, agent illiquidity undermines customer trust in the service and poses a threat to provider reputation. The Helix training and experience sharing between African and South Asian providers has led 23 providers to step up efforts to assist their agents with liquidity management. Some have engaged liquidity runners to deliver e-float or cash to agents, while others started facilitating access to lines of credit to boost agent’s working capital. In addition, some providers have opted to situate rebalancing points closer to the agent outlets and streamline rebalancing processes to enable real time float deposits at partner bank.
  • Minimise Network Downtime: Connectivity in most developing countries has proved a major hurdle in the deployment of agent networks. Some providers have therefore chosen to locate their agents only in areas where there are masts to ensure that agents can carry out transactions and reduce inactivity. Other providers have initiated system upgrades based on recommendations from peers. 
  • Regular Agent Monitoring: Agent monitoring boosts agent loyalty. It builds a relationship between the agent and the provider, enhancing the business partnership. Exposure to best practices during The Helix training sessions have encouraged providers to introduce defined agent monitoring structures. These include outsourcing to 3rd parties and automation of agent monitoring processes to enhance effectiveness and cut cost. Additionally, some providers have formalised fraud and risk mitigation measures in regions with high incidence of fraud.

3. Network sustainability

Agent networks represent a large proportion of providers’ investment in digital finance deployments. Both agent commissions and management costs add up to significant sums expected to be covered by transaction fees. Balancing service affordability and agent remuneration is an art, elusive to many. The Helix-facilitated training and networking has inspired providers to target sustainability from three key directions: 

  • Attractive Agent Business Terms: Whether agents see their business as lucrative affects how much effort they invest in growing the business. As such, agents condition providers’ DFS business growth. Following The Helix training, 13 providers were compelled to review the value proposition for agents to make it more attractive. Some have boosted commissions; others introduced performance bonuses or commissions for customer education and registration. Providers also sought to entice agents with non-monetary benefits like agent portals that facilitate business management or opportunities to address their fellow agents and share best practices for high performing agents. In over-the-counter (OTC) markets, where competitive commissions decide which service is accessed, The Helix spurred provider collaboration to standardise commissions and halt commission wars
  • Revamp Customer Value Proposition: The utility of DFS to customers determines whether they use the service and the corresponding agent network. This is a function of the range of products provider offers and how well they meet customer needs. Twenty providers have gone back to revamp their customer value proposition as a result of The Helix trainings. Some redefined the product portfolio by introducing new use cases, multi-language functionality and repositioning the whole digital offering (e.g. shifting focus to merchant payments). Others dropped transaction fees and introduced airtime bonuses to reward usage. Another group returned to square one, undertaking market research and extensive customer consultations to tailor products to client needs. 
  • Diversify Marketing and Communication Activities: The Helix curriculum sensitises providers to the importance of thoughtful and deliberate marketing activities. Thirteen providers have shifted emphasis from impersonal above-the-line campaigns to targeted below-the-line activities. Some providers in African markets have replicated creative approaches by peers, taking advantage of existing channels such as ‘town criers’ and market days to implement their marketing and communication activities. Many are now using community activation days to encourage customers to visit an agent. Providers are increasingly recognising the agent’s potential and role in communicating and educating the customer. This is being done in conjunction with activities that build trust in the agent network such as locating agents within the banking halls.

Recently, The Helix Institute convened DFS industry experts on regulatory, strategic and operational issues to reimagine agent network management for the future. This blog along with this summary of our earnings from years of interactions with agents and providers set the stage for their exchanges. Subsequent blogs present ideas on how to reinvent liquidity management, Interoperability – A Regulatory Perspective, Progress and Challenges with KYC and Digital ID emerging from the workshop. 

Data in this blog is based on survey responses from about half of the MNO (36), Bank (46), 3rd party (13), Microfinance institution (8) senior managers from 33 countries who attended our training courses to share experiences, exchange ideas and draw inspiration from guest speakers and site visits with generous support from Bill & Melinda Gates Foundation.