Using 3rd party agents to service customers provides a potentially low cost distribution channel for financial service providers. Noting the two basic models being followed – branchless banking servicing and mobile commerce provider models – this note examines the key factors that affect the willingness of the agents to provide m-banking services. The factors being complexity of services, expected volume of transactions, impact on the agent’s primary business, and fee generated per transaction. The role of 3rd party agents is one of the most important issues for those undertaking branchless banking initiatives. The key is to develop a straightforward system that provides enough of a value proposition for the 3rd party agents while properly controlling costs for the branchless banking operator. Critically, the importance of local conditions requires managers undertaking a branchless banking initiative to: investigate international experiences, adapt to local market conditions, balance the timing and deployment of agents vs. potential clients, and balance the amount and types of incentives in order to ensure that there are no “incentive incompatibility” issues.

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