With the boom of the digital financial services (DFS) market in Benin, competition is increasing among suppliers. Long dominated by mobile phone operators, the market is now of interest to other players, such as banks, who are seeking to make their offers accessible, even in the most remote areas where they do not have a branch. To achieve this goal, having a distribution network based on alternative channels is a key objective.

Ecobank Benin, a leader in the banking sector, quickly positioned itself as a pioneer in digital innovation by launching Ecobank Mobile in 2017, a mobile banking solution available for its existing customer base. Inspired by the examples and possibilities discovered during the experience-sharing workshops organized by UNCDF, the bank decided to continue its digital adventure by testing the "Agency Banking" model. The objective for the bank is to reach new customers, particularly those excluded from the traditional banking system, and to improve its medium term profitability by generating savings on the fixed costs of bank branches.

Very poorly developed in West Africa, this model consists in using a network of non-banking agents (traders, retailers, mobile phone credit sellers, etc.) to distribute banking services. Investing in the deployment of an agent is much less expensive than opening a traditional branch, and "Agency Banking" is easily scalable while offering simpler solutions for managing the distribution of banking services.

Supported by UNCDF in a 6-month pilot project, the bank deployed its first agents, called Ecobank Xpress Points, in the cities of Cotonou, Calavi, Porto Novo, Lokossa, Bohicon and Natitingou in October 2018. The consulting firm Amarante, commissioned by UNCDF, monitored the technical implementation and made recommendations to improve the service penetration.

Out of a target of 450 agents, 174 were recruited at the end of March 2019, of which 157 are active (i.e. agents that have been able to carry out transactions on behalf of clients over the past thirty (30) days).

These results are certainly below the penetration levels of mobile phone operators, but remain encouraging for a first deployment of this kind. The very competitive prices applied by money transfer structures combined with difficult economic conditions made it more difficult to achieve the expected results. In addition, there are technical failures affecting the platform's accessibility at times, platform management difficulties and common connectivity problems.
Despite these difficulties, Ecobank's customer base has increased by 21% with more than eight thousand Xpress accounts opened. The accounts are created on the Ecobank mobile application allow customers who do not have traditional bank accounts to carry out transactions with Ecobank Xpress agents or via their mobile phone.

"The figures speak for themselves, some of them are above the objectives set; they encourage us to pursue the option of massive recruitment of populations that have hitherto been unbanked and excluded from the formal system. The activity rate of Xpress accounts remains our main challenge. We are working on it" according to Wilfrid BOCCO - Director of Consumer Banking at Ecobank Benin

Indeed, the activity rate did not follow the same pace in the pilot's areas. While some Xpress points recorded on average only one transaction per week, others did on average two transactions per day.

"I receive many clients who can't read or write. When they come into my shop, they often expect me to wear an Ecobank Mobile t-shirt or cap, to confirm that I am the right person to talk to," said Sosthène, agent at Calavi.
Despite these challenges encountered during the pilot, Ecobank Benin continues to deploy its Xpress agents while undertaking corrective measures. For example, for the connectivity problem, access via USSD is being explored. And agents who already benefit from the daily support of dedicated sales representatives will in addition be supported by adapted marketing campaigns to improve their activity rate.

What can we learn from this first deployment of an agency banking model?
The Agency Banking model brings huge opportunities for banks, provided that the networks of agents deployed are supported by an efficient sales force, that strong communication actions towards the target populations are put in place and that agents benefit from attractive commissions.

However, it is necessary to have all the technical prerequisites in place to avoid failures that negatively impact the accessibility of the service and can discourage customers.

In the West African context where connectivity remains a real issue and smartphone penetration is still low, using technologies such as USSD can facilitate service accessibility.

Ecobank Benin has just paved the way for a new model for West African banks that want to go digital and recruit new customers.

"It is time for the banking sector to invest in alternative channels to reach the populations that need to be financially and economically included the most. UNCDF remains a key partner in supporting the region's banks in their digital transformation towards the inclusion of the most vulnerable populations," said Sabine Mensah, UNCDF Regional Technical Specialist.

Join the webinar on lessons learned from implementing this project on July 5th, 2019

Deploying Xpress agents in Calavi, Cotonou, 2018

By Hugues L.N'GBESSO and Bery KANDJI, Amarante Consulting