Agency Banking

What is Agency Banking?

Agency Banking Model

Agency banking refers to a banking model where traditional banks or financial institutions extend their services through third-party agents rather than using a branch-based approach. In this model, banks appoint agents, who can be individuals or entities, to provide banking and financial services on their behalf in locations where establishing a full-fledged branch might not be feasible or cost-effective.

A banking agent grants a third-party company access to their jurisdiction through a contractual agreement. In the past, major banks held a monopoly on banking access in the world’s largest financial centers. Nevertheless, increased globalization and advancements in technology have led to greater competitiveness in the sector, opening up new opportunities.

By way of an example, Global Processing Services (GPS) operates as a banking agent, holding certifications from Visa and MasterCard. GPS assists multiple payment providers in handling worldwide credit and debit transactions. By partnering with Global Processing Services, payment providers can streamline their operations by establishing a contract with a single entity, enabling them to provide clients with access to payments across more than 40 different countries.

Agency Banking Services

Opting for agency banking proves beneficial for businesses aiming to handle payments across multiple regions without the necessity of obtaining a full banking license in each specific jurisdiction. For example, if your payment processing activities in a particular country are limited initially with plans to expand later, engaging a banking agent provides entry into that region. Leveraging a banking agent offers a practical approach to enter a new country, allowing you to commence on a smaller scale, thereby testing the long-term feasibility for your business.

Agency banking offers the bank the ability to offer their customers:

  1. Cash Deposits: Customers have the option to send money to their account through an agent.
  2. Cash Withdrawals: Customers can withdraw cash at a fuel station or grocery store for purchases.
  3. Balance Queries: Obtain up-to-date information on the account balance.
  4. Mini Statements: Receive a paper-based statement reflecting the current account status or recent payment transfers.
  5. Account Transfers: Move funds between accounts to facilitate money transfers to family members.
  6. Loan Applications: Initiate an application for borrowing money.
  7. Utility Bills: Easily pay for energy bills or other utilities.
  8. Customer Onboarding: Access account opening services for new customers.
  9. Loan Repayment Plans: Repay loans conveniently through regular and straightforward plans.
  10. Credit/Debit Card Payments: Deposit money into a credit or debit card and make payments for goods and services at Point of Sale locations.

Agency Banking v. Neobanking

Agency banking and neobanking are distinct concepts in the financial industry, each representing a different approach to providing banking services. Here are the key differences between agency banking and neobanking:

Model and Structure:

  • Agency Banking: In agency banking, traditional banks or financial institutions extend their services through third-party agents. These agents, which can be individuals or businesses, act as intermediaries to offer basic banking services on behalf of the bank. Agency banking involves leveraging existing entities or individuals to reach underserved or remote areas.
  • Neobank: Neobanks, on the other hand, are entirely digital and operate without physical branches. They are financial institutions that exist purely in the digital space, providing banking services exclusively through online and mobile channels. Neobanks often focus on providing a seamless and user-friendly digital banking experience.

Service Offering

  • Agency Banking: Agents in agency banking typically offer basic banking services such as deposits, withdrawals, fund transfers, and bill payments. The range of services may vary depending on regulatory frameworks and agreements between the bank and the agent.
  • Neobank: Neobanks offer a wide range of banking services entirely through digital platforms. This includes features like online account opening, budgeting tools, expense tracking, and real-time transaction monitoring. Neobanks may not provide physical cards or checks, and their services are often optimized for mobile use.

Technology Integration:

  • Agency Banking: While agency banking may involve the use of technology, such as mobile devices or point-of-sale (POS) terminals, it is not inherently digital. The focus is on extending traditional banking services through existing businesses or individuals.
  • Neobank: Neobanks are built on digital platforms and leverage technology extensively. They often prioritize user-friendly interfaces, mobile apps, and advanced technology to deliver a modern and efficient banking experience.

Physical Presence:

  • Agency Banking: While agency banking extends the reach of traditional banks to areas without physical branches, it still involves a physical presence through the agents.
  • Neobank: Neobanks operate without physical branches. All interactions and transactions take place through digital channels.

Target Audience:

  • Agency Banking: The primary goal of agency banking is often to reach underserved or remote areas, promoting financial inclusion.
  • Neobank: Neobanks typically target tech-savvy and digitally-oriented customers who prefer the convenience of managing their finances through digital platforms.

Thus, Agency banking involves traditional banks extending their services through third-party agents with a physical presence, while neobanking is a digital-only banking model that operates without physical branches.

Regulation of Agency Banking

Agency banking provides an effective solution for payment providers seeking entry into a specific country without the need for comprehensive regulatory approval for local payment processing – i.e., Agency Banking, like Neobanking, obviates the need for a banking or payments license. While these providers may have a limited presence in a country based on their client base, the process of obtaining full regulatory status in each country can be both time-consuming and expensive. In such cases, they opt for a banking agent to extend their reach to more regions. Banks and financial institutions are facilitating service providers to access their services through contractual agreements, enabling them to act as agents on behalf of smaller companies. While the funds continue to flow through the payment systems employed by larger banks, the transactions are initiated or deposited by the smaller agent businesses.

Why Agency Banking?

The need for Agency Banking comes down to cost. Establishing a physical branch or obtaining regulatory approval in every desired location for service provision is prohibitively expensive. This often results in rural or isolated areas lacking access to banking services, and payment service providers facing constraints on their operational reach. Agency banking presents a solution to enhance the accessibility of banking services in rural areas.

Moreover, scaling a business becomes challenging when dealing with sporadic transfers. In the context of rural services, the limited customer reach poses difficulties in expanding the bank’s operations in specific business areas. Adopting agent banking with a digital presence simplifies the provision of banking services across a greater number of countries, facilitating business scalability.

Finally, maintaining a physical presence in a country limits profit generation to customers who visit the bank and hold accounts there. In contrast, indirect banking allows for a digital business to expand its footprint, leading to improved cost efficiency and an expanded range of product offerings.


Interested in Agency Banking? Adam Tracy assists with identifying agent bank partners and local compliance and infrastructure.

Be sure to reach out with any questions or comments!

Otherwise, you can book a free consultation here.

About Adam Tracy

Adam Tracy is a payments expert and entrepreneur who specializes in payment systems, blockchain technology, digital currencies, and other emerging technologies. He is the founder of Blockrunner, LLC that provides consulting services to clients in the blockchain, payments and cryptocurrency arenas.

Tracy has been involved in the payments industry as an attorney, consultant and entrepreneur since 2005, while he was become an expert in blockchain and cryptocurrency since its advent in 2013. Tracy has worked with a wide range of clients, including startups, established businesses, and investor – both in the United States and worldwide. He has advised clients on a wide range of compliance, legal and operational issues related to payment transfer systems, crypto token generation and architecture, cryptocurrency exchanges, regulatory licensing, smart contracts, and other blockchain applications.

In addition to his consulting work, Tracy has founded several companies in the payments, blockchain and cryptocurrency space, including a digital asset hedge fund, licensed electronic money institution and a blockchain-based tokenization platform. He is also a proponent of decentralized finance (DeFi) and has been involved in various DeFi projects.

Tracy is also a frequent speaker and writer on blockchain and cryptocurrency topics. He has been featured in a wide range of publications, including Forbes, Hollywood Reporters, CNBC, Reuters, CoinDesk, and

Find Adam:

Blockrunner, LLC., is a financial services match-making marketplace and consulting company. We are not a bank, FI/NBFI, Payment Service Provider, deposit taking institution, trust, or money services business of any kind. We are not regulated by any financial regulator. Banking, Payment, Processing, and Licensing services are provided by our participating members. This website is for informational purposes only and does not constitute legal advice. If you need legal advice, please consult a licensed attorney in your jurisdiction.