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What is agency banking?

Want to revolutionise your fintech business? Agency banking could accelerate your growth journey. But what is agency banking and how can it help you? Here we explain what agency banking is, what the benefits of agency banking are and how it’s set to transform the financial arena. 

What is agency banking?  
Agency banking is where a card programme manager delivers banking-like functionality, without being a bank. The programme manager functions as the ‘banking agent’ and utilises a financial services provider (you might hear them referred to as an agency service provider) to serve customers.  

The end customer receives a physical or virtual card, with an account number and sort code or IBAN and can make and receive payments via their account.  

It’s also key to note that it’s branchless banking - all the interactions are usually completed through a smartphone, whether that’s via an app or website. 

What is a banking agent? 
A banking agent is an entity who cannot offer banking services themselves, because they don’t have the correct license and regulatory compliance. However, by working with a third-party financial services provider who is able to package up banking services, the agent can start offering these services to end customers. They can offer customers services like paying money in, taking it out, and transferring funds. 

Global Processing Services can assist a business in having their own banking-like capabilities. Find out more about how we can help. 

GPS and banking agents
GPS provides banking agent the ability for GPS’ customers to take and make banking payments using GPS’ banking rails, without needing to be set up as a bank. 

There are a whole host of payment services available via a banking agent which include: Faster Payments in, Faster Payments out, BACS, CHAPS, SEPA payments and Direct Debits.  


Understanding a banking agent 
How a banking agent works with Global Processing Services: 

1.The programme manager signs up with GPS for agency banking. 

2.The programme manager is set up for agency banking by GPS and by GPS’s agency banking service provider. The agency banking service provider sets up all account details and provides the bank accounts into which end customers can pay. 

3.The programme manager must have a separate deposit account with their issuer. This where any funds received from end customers can be transferred into. 

4.The programme manager signs up their end customers for agency banking services, using the GPS API.

5. At this stage, end customer’s banking accounts are set up by the agency banking service provider and returned to GPS, who passes on the details back to the programme manager. 

6. End customers can now pay into their account or transfer money out, using the banking account details provided by their programme manager.
  

Why do customers choose to use a banking agent? 
Banking agents were born out of the need for people who can’t access traditional banking, have banking-like facilities. This could be because they’re financially excluded from incumbent banks, and traditional banking streams, but have access to a mobile phone, which means they can access services through a banking agent.  


What are the benefits of banking agents?

Benefits for banking agents: 

  • It delivers a new revenue stream and the opportunity to grow customer volume.
  • Gives banking agents the ability to offer banking and payment services.
  • Regulatory compliance is maintained. 

Benefits of banking agents to the end customer: 

  • Help reach people who may be financially excluded otherwise - customers just need a smartphone and ID to have banking-like services.
  • It’s branchless banking, which some find more convenient, they just need to go to their nearest banking agent.