Banks seek to boost agents’ security

Kampala, Uganda | THE INDEPENDENT | Commercial banks in Uganda are looking into how they can beef up the security of their agents due to the risk exposed to them for holding cash.

This comes after an incident on 30 June 2019 in Nansana where three guards attached to Tiger Security Group turned against the bank agents at gunpoint before taking off with Shs 13 million.

Patrick Mweheire, the Stanbic Bank Chief Executive Officer said the agents faced the same risk as telecoms’ mobile money agents – and as bankers, they need to have a conversation on the security of the agents.

Agent banking has been a popular fit since it’s coming into force in 2016. According to Mweheire, commercial banks so far have 10, 000 agents countrywide. Telecom companies have 166,000 mobile money agents, according to Bank of Uganda.

Agency banking come as a result of the 2016 amendment of the Financial Institutions Act, 2004 to adopt this channel of banking to increase access to financial services.

A bank agent is an individual or a business that carries out transactions on behalf of the financial institution. It can be a garage, a supermarket, a petrol station or a grocery shop.

Security is one puzzle that has come to face the service that is rivalling mobile money because of its convenience.

Mweheire, also the chairman of the Uganda Bankers’ Association, told URN that they face a similar with ATM’s until they came with the idea of having armed guards manning them.

According to the agents URN spoke to, they are required to provide their own security as the owners of the business.

But also before appointed agents, the bank they represent must inspect their premises to ensure they are in a secure place.

Commercial banks just give agents orientation on how to spot counterfeits, suspicious individuals that might be targeting their money – and it stops there, according to one agent.

Another agent Peter Mutaawe in Kalerwe says it is only God that protects them. He said they have seen those with guards being robbed  .

Police advised recently that mobile money and bank agents should get armed guards.

But the Nansana incident shows that even the guards themselves can be the source of insecurity.

According to the regulations from Bank of Uganda, the prerequisites for conducting agent banking include the fact that a sponsor bank must put in place an effective agent selection process and carry out due diligence on every person it intends to engage as an agent.

Also, a person cannot be appointed as an agent, unless the person has for consecutive six months prior to the making of the application operated an account in a financial institution licensed by the Central Bank.

You must have a licensed business, a physical address, and adequate and secure premises and been in business for the last twelve months.    The central bank also vets and approve each person selected by a financial institution to act as it’s agent for purposes of conducting agent banking.

This meant to ensure that people chosen as agents don’t end up defrauding unsuspecting ordinary people.

Several commercial banks, including Centenary bank, Stanbic, Equity Bank, KCB, and DTB have quickly embraced the use of agents as a way to deepen their reach.

In Kenya, agency banking has been a key component of their banking industry for more than ten years.  The banks there have reported increase in deposits as results of mobilisation through agents. Also, incidents of agents being robbed have been reported.

Commercial banks in Uganda are expected to reduce on the number of physical branches as the use of agents takes hold.

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URN