Agency Banking: Banking the Diaspora

In Digital Transactional Processing, Industry Solutions, Insights by Salim Dhanani

If you’ve ever moved from one country to another, you’ve probably experienced this ridiculous cycle…


by Salim Dhanani
Director of Business Development

… You walk into a bank hoping to set up an account, so you can collect pay from your new employer. Before this bank will set up an account they want to see an official piece of mail—like an electricity or mobile bill. But you often can’t sign up for a mobile contract or utility service without a local bank account! And if you’ve moved for a job, those bills may have a company name on them rather than your own.

If you can’t get a bank account without bills, or bills without a bank account, what’s an expat to do? There’s endless bureaucracy and a lot of finagling, cajoling and persuading to do in order to get banked as an immigrant.

For the growing European diaspora in the United Kingdom this becomes a big problem. We often refer to this group as the “under-banked.” Imagine how hard it is for someone who comes to the UK without a job. It’s nearly impossible to establish yourself if you can’t set up an account to eventually collect pay.

It means we’re seeing a huge and growing demand for non-traditional banking products—ways to circumnavigate the bureaucracy of banks.

Agency banking is the solution. It offers a gateway into the central banking system enabling third parties to create “banking-like” products—with prepaid plumbing—that give these under-banked groups all the basic functional benefits of a traditional bank: employers can deposit funds and cardholders can debit at any vendor. They can transfer money at a low cost compared to banking fees, making remittances a breeze. They can even set up scheduled debits for recurring payments.

The Agency Banking model is also the foundation of new mobile banking solutions that are cropping up in North America and the EU. These solutions stand out because they are, first and foremost, service-oriented. Not weighed by the infrastructure of banks, they can create user-focused tools and interfaces. Unsurprisingly they are winning the hearts and minds and wallets of not only the under-banked, but also a young, mobile working population who value service and simplicity.

As these banking-like products become more and more accepted, there’s a massive opportunity for prepaid program managers to create targeted products—ones that draw on familiar cultural references to build immediate trust with certain segments of the population, or that make a strong value proposition built on flexibility and convenience. If executed well, these products will be used over and over again—creating a balanced consumer and producer surplus.

And here’s a tip: Putting together a program like this can often involve a multitude of players, but in fact Carta has all of them wrapped up in a single platform—enabling deposits, debits, transfers with regional and international clearing systems, right off the shelf.