Amid low penetration of banking services, CRDB Bank Plc on Thursday became the first bank in the country to launch agency banking services, dubbed ‘Fahari Huduma’, aimed at expanding services to those yet to use them.
Agency banking is a concept whereby a commercial bank contracts a different entity or individual to provide services on its behalf. Through the service, customers will be able to access banking services through appointed agents countrywide, with the Tanzania Posts Corporation (TPC) being among major agents of the product.
A range of services will be provided through the service, including cash withdrawals and deposits, repayment of loans as well as payment of utility bills and transfer of funds with the CRDB Bank network.
“Low income and the high cost of banking, coupled with lengthy procedures as well as lack of extensive bank networks, have denied many Tanzanians access to financial services,” CRDB Bank Managing Director Dr Charles Kimei said during the launching ceremony in Dar es Salaam .
The services will be conducted through mobile phones and points of sale (POS) which will be connected to the bank’s network. Future plans are to engage mobile money transfer service agents in offering the service.
Recent studies conducted in Tanzania show that only 12 per cent of the over 40 million people in the country, representing just 5.6 million people, are covered by traditional banking services.
Dr Kimei cited poor infrastructure and bureaucracy, in addition to a scattered population, among challenges facing the expansion of banking services. “It costs about 700m/- to set up a fully-fledged branch and many banks, particularly new and small players, can hardly afford to open up branches in remote areas,” he said.
According to the CRDB Bank boss, there are currently 50 registered financial institutions in the country with a total of 525 branches, with each branch serving an average of 85,000 customers. “This is different to the developing world where a branch serves less than 1,000 people. In these countries there are hardly long queues when one wants to access service at banks,” Mr Kimei said.
Presenting a paper on the features of the product, the bank’s Manager for Agency and Compliance, Mr Donath Mushi, said apart from expanding its reach to customers the new product also presents a business opportunity for local entrepreneurs.
“Agents will be paid commissions for transactions they undertake and this will help to boost their income and be part of the CRDB Bank’s network,” Mr Mushi said. Listed at the Dar es Salaam Stock Exchange (DSE), the bank boasts of over 90 branches, 300 automated teller machines (ATMs) and 1,000 points of sale which are spread all over the country.
By ALVAR MWAKYUSA, Tanzania Daily News