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Case Studies
Correspondent Banking in Brazil
(Part of our Capital
Development and Emerging Markets series)
Sao Paulo, Rio de Janeiro, Brazil
August, 2013
December, 2013
AGENDA
Rationale
Brazil
is often recognized as a global pioneer in banking agent (banking
correspondents) banking, as it was an early adopter of the agent model.
Over the years Brazil has developed a mature network of bank agents
covering more than 99% of the country’s municipalities. Other countries
in Latin America have followed suit, including Mexico (2009), Peru
(2005), Colombia (2006), Ecuador (2008), Venezuela (2009), Argentina
(2010), and Bolivia (2006). Other countries around the world have also
utilized the agent banking model to expand financial services,
including Pakistan, Philippines, Kenya, South Africa, Uganda, and India.
The
regulation, design, and implementation of banking agents and banking
correspondents vary across countries. These differences are evident in
the variety of services offered by agents, the types of businesses
acting as agents, the types of financial institutions that work through
agents, and the business structures employed to manage them. These
differences ultimately contribute to the disparities in the extent to
which banking agents are actually bridging the financial inclusion gap.
Banking
agents help financial institutions to divert existing customers from
crowded branches providing a “complementary,” often more convenient
channel. Other financial institutions, especially in developing
markets, use agents to reach an “additional” client segment or
geography. Reaching poor clients in rural areas is often prohibitively
expensive for financial institutions since transaction numbers and
volumes do not cover the cost of a branch. In such environments banking
agents that piggy back on existing retail infrastructure – and lower
set up and running cost - can play a vital role in offering many
low-income people their first-time access to a range of financial
services. Also, low-income clients often feel more comfortable banking
at their local store than walking into a “marble branch.”
A
banking correspondent is a retail or postal outlet contracted by a
financial institution or a mobile network operator to process clients’
transactions. The agent banking model is one in which banks provide
financial services through nonbank agents, such as grocery stores,
retail outlets, post offices, pharmacies, or lottery outlets. Unlike a
branch teller, it is the owner or an employee of the retail outlet who
conducts the transaction and lets clients deposit, withdraw, and
transfer funds, pay their bills, inquire about an account balance, or
receive government benefits or a direct deposit from their employer.
This model allows banks to expand services into areas where they do not
have sufficient incentive or capacity to establish a formal branch,
which is particularly true in rural and poor areas where as a result a
high percentage of people are unbanked.
Examples of
Experience Sharing meetings:
- Febraban: Federation of Brazilian Banks
- Banco do Brasil
- Capital Markets and Micro Finance
Banks and IT Firms:
- Presentation of the successful
Partnership between a Private Bank and a Retail Network
- Software for Network Integrators in
Correspondent Banking
- Public Bank approach of the financial
inclusion through the Correspondent Banking model/Post Office.

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