Basically, an agency is a business that provides services on behalf of another business.
Usually, the agency is smaller compared to the business(es) they represent. Hence, it is the extension of a bank’s services through agencies. The persons who work for these agencies are called agents.
To become an agent, one has to be verified by the bank. This arrangement opens up a cost-efficient structure for banks to extend their services to a wider audience.
The structure of agency banking
There are three primary members of this structure:
The business which manages agents on behalf of the bank to extend its services. Sometimes, agencies are structured after a one-man business.
The host of the financial services to be offered by an agency.
A representative or owner of an agency. They get to offer the following services amongst others:
- Money transfers
- Deposit collection
- Printing of statements
- Peer-to-peer loans
Agency banking vs. Agent bank
Though used interchangeably, agent bank refers to an actual bank in some cases. An agent bank can be an intermediary between a business and potential partners in a country they seek to set up.
- Agency banking helps banks extend their services at a lower cost
- Agencies can be led and manned by one person
- It isn’t necessarily the same as an agent bank.
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