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Paul Mbugua, CEO of Eclectics International

Kenyan Fintech Firm Delivers Africa’s First Shared Agency Banking Platform

Fintech

Dec. 10, 2021, 3:54 p.m.

Eclectics International, a Kenyan owned fintech company, has been commended for successfully developing and deploying a proprietary shared agency banking platform in Uganda, the first in Africa.

A Shared Agency Banking Platform adopts an approach that allows several financial institutions to share agency banking infrastructure and technology to serve the customers.

Launched in May 2018 as an initiative between the Uganda bankers association and the bank of Uganda, the initiative aimed to expand financial inclusion by extending financial services to the under-banked and unbanked population, mainly in the peri-urban and the rural villages.

This effort saw Uganda’s number of bank account holders increase from 7.4 million in 2017 to over 13 million by January 2021.

The IFC and the world bank recognised the shared agency banking platform as a first in Africa. It has also been rated as the best-regulated agency banking platform in the continent.

In Uganda, the Eclectics Agency Banking Solution now powers over 1 million monthly customer transactions of more than $160million monthly. These include cash deposits, withdrawals, bill payments, school fees, and social security & local remittance fees.

Paul Mbugua, the group CEO and founder of Eclectics International, explained that shared agency banking uses technology to enable the banked, under-banked and unbanked population to access financial services using a shared platform. In this case, instead of each bank in Uganda deploying their own exclusive agency banking platform, they opted for a shared platform.

An application is installed in one central place and uses common physical infrastructure (servers, power, network and devices). In this case, the pos terminals or mobile phones are used by bank agents distributed across the country.

This means that any bank customer from the 24 commercial banks in Uganda can visit any agent and enjoy financial services such as cash deposits, cash withdrawal, account opening, transfer of funds, cash bill payments, among others.

Each of the 24 banks has an agent banking transaction and system monitoring portal, executive dashboard, analytics and comprehensive reports.

“Just to give you a highlight, the overall project was to integrate the shared agency banking platform with the core banking systems and switches of each of the 24 banks. Integrate to almost a similar number of card management systems and integrate to the telcos. In each of the four telcos, we had to integrate with their; USSD platform, mobile money cash in & cash-out, which are two different APIs, SMS among other services they offer,” paul mbugua, eclectics managing director explains.

“in addition to more than 20 billers in the country government systems. Even if we had a near ready product, the biggest job was the integration, which is part of the onboarding in any bank. Remember, some of these banks are multinationals. They rely on international standards to allow any of their data or systems for any of their customers who use their platforms.”

Through the development partner FSD Uganda, 15,600 agents were rolled out across the country. In contrast, there were only 546 bank branches in Uganda by 2017 and the banking sector employed about 11,000 people.

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The agents attend frequent workshops and trade show camps across the country where they are trained how to do banking on behalf of the banks, treat customers and manage risks.

Eclectics is working on the next phase, which will entail rolling out micro-insurance, merchants’ ability to pay using electronic money and local remittances. They will also access the elderly and refugees and enable them to do banking without having any education or any need for technology or national id by using biometric and QR payments for those that want to make payments in the platform.

“We have various emerging markets across the continent expressing interest in the shared platform. These are Kenya, Rwanda, the GIM-UEMOA region that hosts eight francophone countries in West Africa and Zambia (where we are currently live in three banks),” mbugua notes.

He advises countries interested in the shared agency banking platform to have a common expectation of the platform. To reduce time and effort spent being audited by individual banks. The banks could select an independent audit firm that would represent their interests.

Secondly, it is to eliminate the receipting requirement for bank agents, which is mandatory in some countries.

Telcos, however, do not require receipting, i.e. physical receipt. Therefore, a Safaricom, MPESA, MTN shop or Airtel Money agent will use a basic phone, but bank agents must use a POS terminal with physical receipts. This is a barrier to the number of pos terminals that any institution can roll out.

A phone that costs $50 – $100 versus a terminal that cost about $500 is equal to 10 times the cost of laying infrastructure.

Eclectics is a Pan African company founded in 2007 that builds affordable, innovative technology solutions, serving over 260+ financial institutions and other corporations. It is across 25 countries in Africa today and growing, served by a large team of 207 employees, headquartered in Nairobi.

tag: Africa, Fintech, Banking, Financial Services, Kenya,

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