Designing Successful Distribution Strategies for Digital Money
In this report Ignacio Mas and Mike McCaffrey document the variety of ways in which digital financial service providers in developing countries have assembled and managed networks of retail stores as their agents for cash in/cash out payments and for account and product sales.
United Commercial Bank Limited (Model 3: Piece together with smaller master agents)
United Commercial Bank Limited (UCB) is reported to have 149 branches and 101 ATMs in Bangladesh. UCB originally wanted to build its own agent network so it could maintain a high level of control over its agents, ensuring both compliance with Bangladesh Bank regulations, and a high level of service for customers.
MovilRed/Tranza in Colombia (Model 7: use shared agent network)
All banks offer Tranza a line of credit to finance the float account that Tranza must maintain with them. As the bank agency business has grown, Tranza now finds itself occasionally hitting the overall credit ceiling that a bank´s risk department sets for individual borrowers. From the beginning it sought to become a multi-bank network, and refused to grant exclusivity to any bank.
MobiCash Bangladesh (Model 4: Build on GSM airtime distributors)
MobiCash would like to develop a dominant agent network at the national level. However the issue remains that every agent it invests in is allowed to offer direct services for any other organisation in the market.
Having industry giants develop and own distribution channels can provide the scale needed for providers currently struggling to drive revenues from small margins. This blog explores ways in which providers can build big backbones for Innovation for DFS to thrive.