This Brief provides a quick look at the growing use of banking agents to extend financial services to low-income and poor people. Banking agents are retail vendors, lottery outlets, and post offices—trusted local establishments that can double as a kind of bank branch, processing everything from bill and pension payments to deposits, withdrawals, and money transfers. For the most part, however, poor clients are not yet using the full range of financial services. Cross-selling financial services through banking agents and getting poor people not only to use the agent network, but also to become true clients of their bank are still challenges faced by many financial institutions.
Only three years ago, about a quarter of Brazil’s nearly 6,000 municipalities lacked any formal banking services. The reason for this was all too familiar: Reaching poor clients in rural areas is often prohibitively expensive for financial service providers. But banks in Brazil overcame this obstacle by using local agents (correspondent banking) to manage their operations at the village level. Today, banking agents have helped extend financial services to practically all (98 percent) of the country’s municipalities.