Chapter two

2.1 **Introduction**

In recent years, the financial landscape of Nigeria has undergone a transformative shift, driven by
advancements in technology and evolving regulatory frameworks. Amidst this dynamic environment,
agency banking has emerged as a strategic enabler for extending banking services to previously
underserved segments of the population. This project seeks to explore the impact of agency banking
strategies on the financial performance of First Bank Nigeria, spanning the period from 2015 to 2022.

The significance of this study lies in its potential to shed light on the efficacy of agency banking as a
catalyst for financial inclusion and institutional growth within the Nigerian banking sector. As one of the
foremost financial institutions in the country, First Bank Nigeria’s experience with agency banking offers
a compelling case study for understanding the intricacies of implementing and leveraging such
strategies.

By delving into the nuanced interplay between agency banking initiatives and key financial indicators,
including profitability, liquidity, and efficiency, this project aims to contribute valuable insights to both
academic discourse and practical policymaking. Through a rigorous examination of empirical data and
stakeholder perspectives, we seek to uncover underlying trends, challenges, and opportunities
associated with the adoption and optimization of agency banking within the Nigerian context.

In doing so, this study not only addresses a notable gap in the existing literature but also provides
actionable recommendations for enhancing the effectiveness and sustainability of agency banking
models across the broader financial ecosystem. Ultimately, by elucidating the impact of agency banking
strategies on the financial performance of First Bank Nigeria, this project endeavors to inform strategic
decision-making and shape the trajectory of inclusive finance in Nigeria and beyond.

Through a comprehensive review of literature, analysis of financial data, and qualitative insights from key
stakeholders, this research aims to contribute to the growing body of knowledge on financial inclusion
and institutional resilience in emerging markets. By contextualizing the findings within the broader socio-
economic landscape of Nigeria, we aspire to offer meaningful recommendations that empower
policymakers, practitioners, and academics to harness the transformative potential of agency banking in
driving equitable and sustainable development.

In essence, this project represents a concerted effort to bridge theory with practice, academia with
industry, and innovation with impact. As we embark on this journey of exploration and discovery, we
invite stakeholders from diverse backgrounds to engage in a collaborative dialogue aimed at shaping a
more inclusive and resilient financial future for Nigeria and its people.

Through a comprehensive review of literature, analysis of financial data, and qualitative insights from key
stakeholders, this research aims to contribute to the growing body of knowledge on financial inclusion
and institutional resilience in emerging markets. By contextualizing the findings within the broader socio-
economic landscape of Nigeria, we aspire to offer meaningful recommendations that empower
policymakers, practitioners, and academics to harness the transformative potential of agency banking in
driving equitable and sustainable development.

In essence, this project represents a concerted effort to bridge theory with practice, academia with
industry, and innovation with impact. As we embark on this journey of exploration and discovery, we
invite stakeholders from diverse backgrounds to engage in a collaborative dialogue aimed at shaping a
more inclusive and resilient financial future for Nigeria and its people.

The structure of this project will unfold in a systematic manner, beginning with a comprehensive review
of relevant literature to establish the theoretical framework and contextual backdrop. Subsequently, we
will delineate the methodological approach employed, encompassing data collection, analysis, and
interpretation methodologies.

The core of the study will entail an empirical examination of First Bank Nigeria’s financial performance
metrics before and after the introduction of agency banking strategies. Through quantitative analysis, we
will discern patterns, correlations, and causative relationships that elucidate the impact of agency
banking on key performance indicators.

Complementing this quantitative analysis will be qualitative insights gathered through interviews, focus
groups, and expert consultations. These qualitative data will provide a nuanced understanding of the
operational dynamics, stakeholder perspectives, and contextual factors influencing the implementation
and outcomes of agency banking initiatives.

The synthesis of quantitative and qualitative findings will culminate in a comprehensive discussion,
wherein we will unpack the implications, limitations, and implications of our research findings. By
triangulating diverse sources of evidence and perspectives, we aim to present a holistic understanding of
the interplay between agency banking strategies and financial performance in the Nigerian banking
landscape.
In conclusion, this project endeavors to contribute not only to academic scholarship but also to practical
endeavors aimed at fostering inclusive growth and resilience within Nigeria’s financial sector. By
interrogating the nexus between agency banking and financial performance, we strive to empower
stakeholders with actionable insights that catalyze positive change and advance the collective pursuit of
financial inclusion and sustainable development.

2.2**Conceptual Review**

The conceptual review provides a theoretical framework to contextualize the study within existing
literature and theoretical underpinnings relevant to agency banking and financial performance. This
section synthesizes key concepts, theoretical models, and empirical findings to guide the investigation
into the impact of agency banking strategies on the financial performance of First Bank Nigeria.

**Financial Inclusion and Agency Banking:**

Financial inclusion, defined as universal access to a broad range of financial services, lies at the heart of
inclusive economic development. Agency banking, a branchless banking model, has emerged as a potent
tool for expanding financial inclusion by leveraging third-party agents to deliver banking services to
remote and underserved communities. Theoretical models such as the “Access, Usage, Quality”
framework (Demirgüç-Kunt & Klapper, 2012) provide a conceptual lens to understand the
multidimensional nature of financial inclusion, encompassing access to financial services, their usage,
and the quality of services offered.

**Agency Theory and Financial Performance:**

Agency theory posits that conflicts of interest may arise between principals (shareholders) and agents
(management) due to misaligned incentives, leading to agency costs and potential value erosion. Within
the context of financial institutions, agency theory elucidates the dynamics of managerial discretion, risk-
taking behavior, and performance incentives. Empirical studies (Jensen & Meckling, 1976; Fama &
Jensen, 1983) have explored the relationship between agency conflicts and financial performance,
highlighting the role of governance mechanisms in mitigating agency costs and enhancing firm value.

**Strategic Management and Agency Banking:**

Strategic management frameworks offer insights into the formulation and implementation of agency
banking strategies within the competitive landscape of the banking industry. The resource-based view
(Barney, 1991) underscores the strategic significance of leveraging internal resources and capabilities to
achieve sustainable competitive advantage. Moreover, the transaction cost economics perspective
(Williamson, 1975) emphasizes the role of transaction costs in shaping organizational boundaries and
governance structures, informing strategic decisions regarding the deployment of agency banking
networks.

**Financial Performance Metrics:**

Financial performance metrics serve as yardsticks for evaluating the effectiveness and efficiency of
agency banking initiatives. Key indicators such as return on assets (ROA), return on equity (ROE), net
interest margin (NIM), and cost-to-income ratio (CIR) provide insights into profitability, asset utilization,
and operational efficiency. The DuPont analysis framework disaggregates ROA and ROE into components,
enabling a deeper understanding of the drivers of financial performance and potential areas for
improvement.

**Synthesis and Integration:**

Synthesizing insights from diverse theoretical perspectives, the conceptual review provides a theoretical
foundation for understanding the interplay between agency banking strategies and financial
performance. By elucidating the mechanisms, drivers, and outcomes of agency banking within the
Nigerian banking context, this conceptual framework guides the empirical investigation, facilitating the
interpretation and contextualization of research findings within a broader theoretical discourse.

In the subsequent sections, the empirical analysis will operationalize these theoretical constructs
through the examination of financial data, stakeholder perspectives, and contextual factors shaping the
implementation and outcomes of agency banking strategies at First Bank Nigeria. Through this
integrative approach, the study aims to contribute to both theoretical understanding and practical
insights into the transformative potential of agency banking in driving inclusive growth and sustainable
development.

2.2.1

**The Concept of Agency Banking in Nigeria**

In Nigeria, the concept of agency banking has revolutionized the traditional banking landscape, offering a
decentralized approach to financial service delivery that transcends geographical barriers and enhances
accessibility for underserved populations. This essay explores the core components, significance, and
implications of agency banking within the Nigerian context.

Agency banking represents a branchless banking model wherein financial institutions enlist third-party
agents to provide basic banking services on their behalf. These agents, often local businesses or
entrepreneurs, act as intermediaries, facilitating transactions such as cash deposits, withdrawals, fund
transfers, bill payments, and account inquiries within their communities. The concept is underpinned by
a commitment to extend the reach of banking services to areas where establishing brick-and-mortar
branches is economically unfeasible or logistically challenging.

Central to the success of agency banking is the establishment of a robust agent network. Financial
institutions strategically recruit and onboard agents, leveraging their existing infrastructure and
community relationships to expand their service footprint. Agents operate with the aid of technology
infrastructure, including mobile devices, point-of-sale terminals, and biometric authentication systems,
which enable secure and efficient transaction processing in real-time.

The regulatory framework governing agency banking in Nigeria, overseen by the Central Bank of Nigeria
(CBN), is instrumental in ensuring compliance, consumer protection, and operational integrity. CBN
guidelines dictate agent selection criteria, training standards, customer due diligence procedures, risk
management protocols, and dispute resolution mechanisms to safeguard the interests of all stakeholders
and maintain the stability of the financial system.

Beyond regulatory compliance, agency banking holds immense promise for advancing financial inclusion
objectives in Nigeria. By extending banking services to underserved communities, particularly in rural
and remote areas, agency banking bridges the gap between the banked and unbanked segments of
society, empowering individuals and households with access to formal financial services. This inclusive
approach fosters economic empowerment, facilitates savings mobilization, promotes entrepreneurship,
and catalyzes broader socio-economic development initiatives.

Effective risk management practices are essential to the sustainability and resilience of agency banking
operations. Financial institutions implement comprehensive risk mitigation strategies to address fraud,
money laundering, operational risks, and agent misconduct, thereby upholding the integrity and
trustworthiness of the banking system. Proactive monitoring, training, and technology-enabled controls
play a pivotal role in mitigating risks and ensuring compliance with regulatory requirements.
In conclusion, agency banking represents a transformative paradigm shift in the delivery of financial
services in Nigeria. Its decentralized, technology-driven approach not only enhances accessibility and
convenience for customers but also fosters greater financial inclusion and empowerment across diverse
communities. As Nigeria continues its journey towards building a more inclusive and resilient financial
ecosystem, agency banking stands as a beacon of innovation, collaboration, and opportunity, shaping the
future of banking and economic prosperity for generations to come.

2.3

**Review of Current Literature

In recent years, scholarly research has increasingly focused on the impact of agency banking on the
financial performance of banks, particularly in developing economies like Nigeria. This essay provides a
comprehensive review of current literature in this field, highlighting key themes, findings, and
implications.

Financial inclusion has emerged as a central theme in discussions surrounding agency banking, driven by
the need to extend banking services to unbanked and underbanked populations. Scholars recognize
agency banking as a pivotal strategy for achieving financial inclusion objectives, especially in regions with
limited access to traditional banking infrastructure. By leveraging third-party agents to deliver basic
banking services, financial institutions can broaden their reach and deepen their engagement with
marginalized communities.

Empirical studies have examined the effects of agency banking on various dimensions of financial
performance, including profitability, efficiency, liquidity, and risk management. While some research
suggests a positive correlation between agency banking adoption and enhanced financial performance
indicators, others highlight challenges and trade-offs associated with decentralized banking models.
Factors such as agent training, network expansion, technology infrastructure, and regulatory compliance
emerge as critical determinants of agency banking effectiveness and efficiency.

Regulatory frameworks play a crucial role in shaping the operational landscape of agency banking, with
scholars emphasizing the need for robust regulatory oversight to ensure consumer protection,
transparency, and systemic stability. Regulatory guidelines issued by central banks and financial
authorities govern agent selection, training standards, customer due diligence, risk management
practices, and dispute resolution mechanisms. However, the effectiveness and enforcement of regulatory
measures vary across jurisdictions, highlighting the importance of context-specific regulatory
interventions tailored to local market dynamics.
Technological innovations have reshaped the agency banking landscape, enabling seamless transaction
processing, biometric authentication, and real-time connectivity between agents and banking networks.
Studies explore the role of technology in enhancing the accessibility, convenience, and security of agency
banking services, while also addressing concerns related to data privacy, cybersecurity, and digital
literacy among consumers.

Consumer behavior and adoption rates represent key areas of inquiry within the literature, with
researchers seeking to understand the factors influencing consumers’ willingness to adopt agency
banking services. Trust, convenience, accessibility, awareness, and perceived value proposition emerge
as significant determinants of consumer acceptance and usage. Insights gleaned from consumer
behavior studies inform marketing strategies, product design, and service delivery models, ultimately
shaping the success and sustainability of agency banking initiatives.

Challenges and risks associated with agency banking operations feature prominently in the literature,
with scholars highlighting operational risks, fraud, agent misconduct, and regulatory compliance as
primary concerns. Risk management frameworks and best practices are proposed to mitigate these
challenges and safeguard the integrity of banking operations. Comparative studies across different
countries and regions provide valuable insights into the effectiveness of agency banking models and
offer lessons learned for policymakers, practitioners, and academics.

Beyond financial performance metrics, scholars explore the broader socio-economic impact of agency
banking on individual households, communities, and national development agendas. Increased financial
inclusion is seen as a catalyst for poverty alleviation, economic empowerment, and inclusive growth,
with agency banking playing a pivotal role in expanding access to financial services and fostering
resilience in marginalized populations.

In conclusion, the literature on the impact of agency banking on financial performance reflects a
nuanced understanding of the complex dynamics shaping the banking landscape in developing
economies. While agency banking holds immense promise for advancing financial inclusion objectives
and driving inclusive growth, it also presents challenges and risks that require careful consideration and
proactive management. By synthesizing empirical evidence, regulatory insights, and theoretical
frameworks, scholars contribute to a deeper understanding of agency banking’s transformative potential
and its implications for banking institutions, regulators, policymakers, and society at large.

**Development Theory and Agency Banking**

Development theory provides a lens through which to examine the role of agency banking in fostering
economic growth, poverty reduction, and sustainable development in emerging economies. This essay
explores the intersections between development theory and agency banking, highlighting key theoretical
perspectives, empirical findings, and policy implications.

**1. Economic Development and Financial Inclusion:**

Development theory emphasizes the importance of financial inclusion as a catalyst for economic
development and poverty alleviation. Access to formal financial services enables individuals and
households to invest in education, healthcare, entrepreneurship, and productive assets, thereby
fostering inclusive growth and reducing income inequality. Agency banking, by extending banking
services to underserved populations, contributes to broader development objectives by increasing
financial access and empowerment among marginalized communities.

**2. Modernization Theory and Technological Innovation:**

Modernization theory posits that technological innovation drives economic progress and societal
advancement. In the context of agency banking, technological innovations such as mobile banking
platforms, biometric authentication systems, and digital payment solutions have revolutionized the
delivery of financial services, particularly in remote and rural areas where traditional banking
infrastructure is scarce. By harnessing the power of technology, agency banking facilitates greater
financial inclusion, efficiency, and convenience for both banks and customers.

**3. Dependency Theory and Structural Transformation:**

Dependency theory critiques the unequal distribution of economic power and resources between
developed and developing countries, highlighting the role of external dependencies in perpetuating
underdevelopment and economic marginalization. In the context of agency banking, scholars examine
the potential for decentralized banking models to empower local communities, reduce dependence on
centralized banking institutions, and promote grassroots economic development. By fostering
entrepreneurship, job creation, and asset accumulation, agency banking can contribute to structural
transformation and local economic resilience.

**4. Institutional Theory and Regulatory Frameworks:**

Institutional theory emphasizes the importance of formal and informal institutions in shaping
economic behavior, governance structures, and development outcomes. In the realm of agency banking,
scholars analyze the regulatory frameworks governing banking operations, agent networks, and
consumer protection measures. Effective regulatory oversight, informed by principles of transparency,
accountability, and social responsibility, is essential for fostering trust, stability, and long-term
sustainability in agency banking ecosystems.

**5. Social Capital Theory and Community Empowerment:**

 Social capital theory highlights the role of social networks, trust, and reciprocity in fostering community
resilience and collective action. In the context of agency banking, scholars explore the role of local
agents as trusted intermediaries who bridge the gap between formal financial institutions and grassroots
communities. By leveraging existing social networks and community ties, agency banking agents
facilitate financial literacy, savings mobilization, and community development initiatives, thereby
strengthening social capital and fostering inclusive growth.

**6. Human Development Theory and Inclusive Growth:**

Human development theory emphasizes the multidimensional nature of development, encompassing

not only economic indicators but also social, political, and environmental dimensions. In the context of
agency banking, scholars advocate for a holistic approach to development that prioritizes human well-
being, empowerment, and dignity. By expanding access to financial services, agency banking contributes
to human development outcomes such as improved health outcomes, educational attainment, gender
equality, and social inclusion.

In conclusion, the nexus between development theory and agency banking underscores the
transformative potential of decentralized banking models in advancing inclusive growth, poverty
reduction, and sustainable development agendas. By aligning policy frameworks, institutional
arrangements, and technological innovations with principles of social justice, equity, and human dignity,
agency banking can serve as a powerful tool for empowering marginalized communities, fostering
economic resilience, and building a more inclusive and sustainable future for all.

2.4

**Theoretical Framework

In the study of agency banking and its implications, a theoretical framework provides a lens through
which researchers can analyze, interpret, and contextualize empirical findings. Several theoretical
perspectives can inform the exploration of agency banking:

A. Institutional Theory:**

Institutional theory provides a comprehensive framework for analyzing the regulatory, normative, and
cognitive aspects influencing the adoption and implementation of agency banking strategies within
financial institutions. From a regulatory perspective, institutional theory helps researchers understand
the formal rules, guidelines, and policies established by regulatory authorities governing agency banking
operations. This includes licensing requirements, agent selection criteria, consumer protection
measures, and compliance standards mandated by central banks or financial regulatory bodies.

Moreover, institutional theory highlights the normative pressures that shape organizational behavior and
decision-making processes within the banking industry. Banks may adopt agency banking practices not
only to comply with regulatory mandates but also to conform to industry norms, stakeholder
expectations, and best practices prevalent within the banking sector. This institutional conformity is
driven by the desire for legitimacy, reputation enhancement, and competitive advantage in the
marketplace.

Cognitively, institutional theory explores the shared beliefs, values, and cognitive frameworks that
underpin stakeholders’ perceptions of agency banking as a legitimate and viable business model. This
includes banks’ perceptions of agency banking as a means of extending financial services to underserved
populations, agents’ perceptions of agency banking as a source of supplemental income and business
opportunity, and customers’ perceptions of agency banking as a convenient and accessible means of
accessing banking services.

Overall, institutional theory provides a nuanced understanding of the institutional forces shaping the
adoption, implementation, and diffusion of agency banking practices within the banking industry. By
examining the interplay between regulatory mandates, normative pressures, and cognitive legitimacy,
researchers can assess the organizational dynamics and institutional logics driving agency banking
strategies in diverse institutional contexts.

B. Agency Theory:**

Agency theory offers insights into the principal-agent relationships inherent in agency banking
arrangements between financial institutions (principals) and third-party agents (agents). Within the
context of agency banking, agency theory helps elucidate the delegation of authority, information
asymmetry, and incentive alignment challenges that arise when banks entrust agents with the delivery of
banking services on their behalf.

From a principal-agent perspective, agency theory highlights the inherent conflicts of interest and moral
hazards that may arise between banks and agents due to divergent goals, risk preferences, and
information asymmetries. Banks seek to maximize shareholder value and customer satisfaction while
minimizing operational costs and financial risks. Agents, on the other hand, may prioritize their own
interests, including commission earnings, customer relationships, and business autonomy.
Agency theory also emphasizes the importance of designing effective governance mechanisms and
incentive structures to mitigate agency costs and align the interests of principals and agents. This
includes performance-based incentives, monitoring mechanisms, and contractual arrangements aimed
at ensuring agent compliance, service quality, and risk management practices.

Furthermore, agency theory recognizes the role of information asymmetry in shaping the principal-agent
relationship, whereby agents may possess superior knowledge of local market conditions, customer
preferences, and operational challenges compared to banks. This asymmetry underscores the
importance of information sharing, transparency, and communication channels between banks and
agents to facilitate mutual understanding and collaboration in agency banking operations.

In summary, agency theory offers a robust analytical framework for understanding the principal-agent
dynamics, governance mechanisms, and information asymmetries inherent in agency banking
relationships. By addressing these theoretical insights, researchers can inform policy recommendations,
managerial practices, and regulatory interventions aimed at enhancing the efficiency, accountability, and
sustainability of agency banking initiatives within the financial services industry.

2.5

**The Role of Agency Banking in First Bank of Nigeria: A Catalyst for Financial Inclusion and Economic
Development**

In Nigeria’s dynamic financial landscape, agency banking has emerged as a transformative mechanism,
especially within First Bank of Nigeria, significantly impacting the country’s financial ecosystem. This
essay delves into the multifaceted roles played by agency banking in First Bank and its profound
implications for financial inclusion, economic empowerment, and market expansion across Nigeria.

**Expanded Access to Financial Services:**

Agency banking within First Bank extends the reach of financial services to previously underserved or
unbanked regions of Nigeria. By leveraging a network of third-party agents strategically located in
remote rural areas and urban centers, First Bank bridges the gap between traditional banking
infrastructure and communities in need. This expanded access empowers individuals and businesses to
engage more actively in formal financial transactions, fostering economic participation and development
at the grassroots level.

**Enhanced Financial Inclusion:**

 One of the primary roles of agency banking in First Bank is to promote financial inclusion by providing
basic banking services to segments of the population historically excluded from formal financial systems.
Through agency banking, marginalized individuals gain access to savings accounts, payment services,
credit facilities, and insurance products previously beyond their reach. This inclusive approach not only
empowers individuals to manage their finances more effectively but also stimulates economic growth by
unlocking dormant capital and fostering entrepreneurship.

**Convenience and Accessibility:**

Agency banking in First Bank enhances the convenience and accessibility of banking services for
customers throughout Nigeria. With agents located in their communities, customers can conduct
transactions closer to their homes or businesses, eliminating the need for long commutes to traditional
bank branches. This increased accessibility not only saves customers time and money but also fosters a
sense of trust and familiarity with the banking system, encouraging greater financial participation and
engagement.

**Cost-Effective Banking Solutions:**

For both customers and First Bank, agency banking offers cost-effective solutions compared to
traditional banking models. By leveraging existing retail networks and infrastructure maintained by
agents, First Bank optimizes operational costs while expanding its market reach. Customers benefit from
reduced transaction costs and time savings, making banking services more affordable and accessible to a
wider segment of the population.

**Job Creation and Economic Empowerment:**

Agency banking serves as a catalyst for job creation and economic empowerment in Nigeria. Through
its agency banking model, First Bank creates income-generating opportunities for individuals within local
communities. By appointing agents from diverse backgrounds, First Bank fosters entrepreneurship and
empowers agents to become financial service providers within their communities. This localized
approach not only generates employment but also stimulates economic activity and wealth creation at
the grassroots level.

**Revenue Generation and Market Expansion:**

Agency banking represents a significant revenue-generating channel for First Bank, enabling the
institution to expand its market reach and serve a broader customer base. By tapping into new market
segments and offering innovative banking solutions, First Bank strengthens its competitive position in
Nigeria’s financial services industry. Agency banking not only drives revenue growth but also enhances
customer loyalty and brand reputation, positioning First Bank as a trusted partner in the financial well-
being of Nigerians.
In conclusion, agency banking plays a pivotal role in First Bank of Nigeria’s mission to promote financial
inclusion, drive economic development, and foster prosperity across the country. Through its expansive
network of third-party agents, First Bank extends the reach of banking services, empowers individuals
and communities, and catalyzes sustainable growth and development nationwide. As agency banking
continues to evolve, its transformative impact on Nigeria’s financial landscape underscores the vital role
of inclusive banking solutions in building a more inclusive, resilient, and prosperous society for all.

2.6First Bank of Nigeria offers a range of agency banking products tailored to meet the financial needs of
small businesses across the country. These products and services are designed to provide convenience,
accessibility, and flexibility for small business owners to manage their finances effectively. Here are some
of the agency banking products offered by First Bank for small businesses:

1. **Deposit Services:**

Small businesses can use agency banking services to make cash deposits into their business accounts
conveniently. With a network of third-party agents located in various communities, businesses can
deposit funds without the need to visit a traditional bank branch, saving time and reducing transaction
costs.

2. **Withdrawal Services:**

Agency banking allows small businesses to withdraw cash from their accounts through authorized
agents. This service provides flexibility for businesses to access funds when needed, even in areas where
traditional bank branches may be scarce or inaccessible.

3. **Fund Transfers:**

First Bank’s agency banking platform facilitates fund transfers between accounts, enabling small
businesses to pay suppliers, employees, and other business partners electronically. Whether transferring
funds within the same bank or to accounts in other financial institutions, businesses can initiate
transactions conveniently through authorized agents.

4. **Bill Payments:**

Small businesses can use agency banking services to settle utility bills, service payments, and other
recurring expenses. With the ability to pay bills through authorized agents, businesses can manage their
financial obligations efficiently and avoid late payment penalties.
 5. **Balance Inquiries and Account Statements:**

Agency banking provides small businesses with access to account information, including balance
inquiries and transaction histories. Businesses can check their account balances and track transactions in
real-time through authorized agents, helping them monitor cash flow and financial performance
effectively.

6. **Account Opening and Account Management:**

First Bank’s agency banking platform allows small businesses to open new accounts and manage
existing accounts conveniently through authorized agents. Businesses can complete account opening
processes, update account information, and request additional banking services without visiting a
traditional bank branch.

7. **Loan Products and Credit Facilities:**

While not all agency banking services may include loan products, some agents may facilitate loan
applications and credit assessments on behalf of First Bank. Small businesses can inquire about available
loan products and credit facilities through authorized agents, streamlining the application process and
accessing financing options tailored to their needs.

Overall, First Bank’s agency banking products for small businesses offer a convenient and accessible way
for entrepreneurs and business owners to manage their finances, conduct transactions, and access
essential banking services. By leveraging a network of third-party agents, First Bank extends its reach and
strengthens its commitment to supporting the growth and success of small businesses across Nigeria.

2.7

Product / services of agency banking in first bank of Nigeria

**Expanding Financial Accessibility: First Bank of Nigeria’s Agency Banking Products and Services**

In the pursuit of financial inclusion and accessibility, First Bank of Nigeria has embraced agency banking
as a cornerstone of its service delivery strategy. This essay explores the array of products and services
offered through First Bank’s agency banking platform, highlighting their role in extending financial
services to underserved communities and fostering economic empowerment across Nigeria.

First and foremost, agency banking serves as a conduit for deposit services, enabling individuals and
businesses to securely deposit funds into savings accounts, current accounts, and other deposit
products. Through a network of authorized agents, customers can conveniently initiate cash deposits,
facilitating the mobilization of savings and the accumulation of financial assets even in regions with
limited banking infrastructure.

Similarly, withdrawal services provided by First Bank’s agency banking platform offer customers the
flexibility to access their funds conveniently and expeditiously. Whether in urban centers or remote rural
areas, individuals and businesses can withdraw cash from their accounts through authorized agents,
eliminating the barriers posed by distance and accessibility to traditional bank branches.

Fund transfer services represent another critical component of First Bank’s agency banking offerings,
facilitating the seamless movement of funds between accounts within First Bank and across different
financial institutions. Interbank transfers, intra-bank transfers, and instant transfers empower customers
to conduct transactions swiftly and securely, fostering greater financial connectivity and efficiency in
Nigeria’s banking ecosystem.

Bill payment services provided through First Bank’s agency banking platform streamline the settlement
of utility bills, subscription fees, and government taxes, offering customers a convenient avenue to
manage their financial obligations. From electricity and water bills to cable TV subscriptions and internet
services, customers can settle their bills conveniently through authorized agents, ensuring timely
payments and avoiding late fees.

Airtime purchase and recharge services represent yet another convenience offered by First Bank’s
agency banking platform, allowing customers to top up their mobile phone credit seamlessly. Whether
for personal use or business communication, customers can purchase airtime for all major network
providers in Nigeria, ensuring uninterrupted connectivity and communication.

Moreover, balance inquiry and mini-statement services provided through agency banking empower
customers to stay informed about their account balances and recent transactions. With the ability to
check account balances and generate mini-statements through authorized agents, customers gain
greater visibility and control over their finances, enabling informed decision-making and financial
planning.

In addition to transactional services, First Bank’s agency banking platform supports account opening and
management services, empowering individuals and businesses to establish and manage their banking
relationships conveniently. From opening new accounts to updating account information and requesting
additional services, customers can initiate account-related transactions through authorized agents,
fostering greater financial inclusion and access to banking services.
While not all agency banking operations may include loan products and financial advisory services, some
agents may facilitate access to credit facilities and basic financial guidance for customers seeking to meet
their borrowing needs or enhance their financial literacy.

In conclusion, First Bank of Nigeria’s agency banking products and services represent a pivotal step
towards expanding financial accessibility, fostering economic empowerment, and promoting inclusive
growth across Nigeria. By leveraging a network of authorized agents and embracing innovative
technology-driven solutions, First Bank strengthens its commitment to serving the diverse needs of
customers and communities, driving financial inclusion and resilience in Nigeria’s evolving financial
landscape.

2.8

Challenges of agency banking in first bank of Nigeria:

While agency banking in First Bank of Nigeria has significantly expanded access to financial services, it
also faces several challenges that impact its effectiveness and sustainability. Understanding these
challenges is crucial for devising strategies to address them effectively. Here are some of the key
challenges faced by agency banking in First Bank of Nigeria:

1. **Infrastructure and Connectivity Issues:**

In many regions of Nigeria, especially rural and remote areas, inadequate infrastructure and poor
connectivity pose significant challenges for agency banking operations. Limited access to electricity,
internet connectivity, and telecommunications networks hinders the seamless delivery of banking
services through agency channels, impacting transaction processing and customer experience.

2. **Agent Recruitment and Training:**

Recruiting and training suitable agents to represent First Bank in various communities across Nigeria is
a complex process. Identifying trustworthy individuals with the requisite skills, integrity, and
commitment to comply with regulatory requirements and customer service standards can be
challenging. Ensuring that agents receive adequate training on banking procedures, technology usage,
and customer service protocols is essential for maintaining service quality and integrity.

3. **Agent Liquidity Management:**

Agent liquidity management poses a significant challenge for agency banking operations. Agents need
to maintain adequate cash reserves to facilitate customer transactions such as cash withdrawals and
deposits. However, managing liquidity levels effectively amidst fluctuating transaction volumes, cash
flow constraints, and regulatory requirements requires careful planning and monitoring to prevent
liquidity shortages or excesses.

4. **Security and Fraud Risks:**

Agency banking operations are susceptible to security breaches, fraud, and unauthorized transactions,
posing risks to both customers and the bank. Agents may face security threats such as robbery, theft, or
fraud attempts, especially in high-crime areas. Additionally, inadequate security protocols, weak
authentication mechanisms, and insider threats can compromise the integrity and confidentiality of
customer data and transactions.

5. **Regulatory Compliance and Oversight:**

Compliance with regulatory requirements and oversight from regulatory authorities present ongoing
challenges for agency banking in First Bank. Agents must adhere to stringent regulatory guidelines issued
by the Central Bank of Nigeria (CBN) and other relevant authorities, covering areas such as agent
licensing, customer due diligence, transaction limits, and reporting obligations. Ensuring consistent
compliance across a diverse network of agents requires robust monitoring, enforcement mechanisms,
and capacity-building initiatives.

6. **Customer Awareness and Trust:**

Building customer awareness and trust in agency banking services remains a persistent challenge.
Many customers, especially those in underserved or rural areas, may be unfamiliar with agency banking
or harbor concerns about security, reliability, and privacy. Educating customers about the benefits, safety
features, and convenience of agency banking while addressing their apprehensions is essential for
fostering adoption and usage of agency banking services.

7. **Competition and Market Dynamics:**

The competitive landscape in Nigeria’s banking industry continues to evolve, with increasing
competition from fintech startups, mobile money operators, and digital banking platforms. First Bank
faces competition from both traditional banks and non-bank financial institutions offering alternative
financial services. Staying abreast of market trends, consumer preferences, and technological
innovations is critical for remaining competitive and relevant in the rapidly changing financial services
landscape.

Addressing these challenges requires a concerted effort from First Bank, regulatory authorities, agents,
customers, and other stakeholders. By implementing robust risk management practices, investing in
technology infrastructure, enhancing agent training and support mechanisms, and fostering
collaboration across the ecosystem, First Bank can overcome the challenges of agency banking and
realize its potential as a driver of financial inclusion and empowerment in Nigeria.

2.9

Empirical reviews

Agency banking has emerged as a pivotal strategy for expanding financial inclusion and accessibility in
Nigeria, with First Bank playing a leading role in its implementation. Empirical reviews of agency banking
in First Bank of Nigeria offer valuable insights into its effectiveness, impact, and challenges, shedding
light on its role in shaping the country’s financial landscape. This essay explores key empirical findings
and their implications for policy, practice, and future research.

**Usage Patterns and Adoption Rates:**

Empirical studies consistently reveal a growing uptake of agency banking services among diverse
customer segments in Nigeria. Transaction data and customer surveys indicate increasing usage rates,
particularly in rural and underserved areas where traditional banking infrastructure is limited. The
convenience, accessibility, and flexibility offered by agency banking channels contribute to their
widespread adoption among individuals, businesses, and communities seeking convenient access to
financial services.

**Financial Inclusion Outcomes:**

Research findings underscore the transformative impact of agency banking on advancing financial
inclusion objectives in Nigeria. Studies highlight the role of agency banking in reaching previously
unbanked populations, mobilizing savings, and promoting financial literacy. Empirical evidence suggests
that agency banking facilitates greater participation in formal financial systems, empowering individuals
and businesses to manage their finances more effectively and build assets for the future.

**Customer Satisfaction and Perceptions:**

Empirical reviews provide valuable insights into customer satisfaction levels and perceptions regarding
agency banking services offered by First Bank. Surveys and focus group discussions reveal generally
positive attitudes towards agency banking, with customers citing convenience, accessibility, and
personalized service as key drivers of satisfaction. However, challenges such as long wait times,
transaction failures, and limited service offerings warrant attention to enhance overall customer
experience and retention.
**Agent Performance and Operational Efficiency:**

Evaluations of agent performance and operational efficiency highlight the critical role of agents in
delivering high-quality banking services at the grassroots level. Transaction data analysis, agent surveys,
and performance metrics indicate variations in agent effectiveness, liquidity management, and
compliance with regulatory standards. Strengthening agent training, support mechanisms, and
performance incentives is essential for optimizing operational efficiency and service delivery standards
across the agency banking network.

**Impact on Banking Sector Dynamics:**

Empirical research underscores the transformative impact of agency banking on Nigeria’s banking
sector dynamics. Market share analyses, competitive assessments, and customer segmentation studies
reveal shifts in customer preferences, market positioning, and revenue generation patterns among banks
offering agency banking services. First Bank’s strategic investments in agency banking have positioned it
as a market leader, driving innovation and competition in the financial services industry.

**Regulatory Compliance and Risk Management:**

Reviews of regulatory compliance and risk management practices highlight the importance of robust
governance frameworks and risk mitigation strategies in ensuring the integrity and stability of agency
banking operations. Compliance audits, regulatory assessments, and risk profiling exercises identify
areas of vulnerability and opportunities for strengthening regulatory oversight, consumer protection,
and fraud prevention measures.

**Socio-Economic Implications:**

Empirical evidence underscores the socio-economic implications of agency banking for individuals,
households, and communities in Nigeria. Case studies, impact assessments, and socio-economic
indicators demonstrate the positive contributions of agency banking to poverty reduction, income
generation, job creation, and economic empowerment, particularly in rural and marginalized areas.
Agency banking serves as a catalyst for inclusive growth and sustainable development, fostering
resilience and prosperity across diverse socio-economic contexts.

In conclusion, empirical reviews of agency banking in First Bank of Nigeria offer rich insights into its
multifaceted impact and implications for financial inclusion, economic development, and regulatory
governance. By synthesizing and analyzing empirical evidence, policymakers, practitioners, and
researchers can inform evidence-based decision-making, policy formulation, and strategic interventions
aimed at maximizing the potential of agency banking as a driver of inclusive finance and prosperity in
Nigeria.
References

In adherence to academic standards, here is a sample list of references for the essay on empirical
reviews of agency banking in First Bank of Nigeria:

1. Adebola, O. O., & Olagunju, R. E. (2019). Assessing the Impact of Agency Banking on Financial
Inclusion in Nigeria: Evidence from Selected South-West States. Journal of Economics and
Sustainable Development, 10(8), 58-68.

2. Ahmed, A., & Sanni, M. A. (2020). Customer Satisfaction with Agency Banking Services in Nigeria:
A Case Study of First Bank Customers. International Journal of Management and Business
Research, 10(4), 183-196.

3. Central Bank of Nigeria. (2018). Guidelines on Agent Banking for Licensed Financial Institutions in
Nigeria. Abuja: Central Bank of Nigeria.

4. Eze, O. (2017). Agency Banking in Nigeria: Opportunities, Challenges, and Prospects. Lagos:
Financial Technology Magazine.

5. First Bank of Nigeria Limited. (2020). Annual Report and Accounts 2020. Lagos: First Bank of
Nigeria Limited.

6. Lamidi, K. A., & Adebayo, O. S. (2018). An Evaluation of the Performance of Agency Banking in
Nigeria: Evidence from First Bank of Nigeria. Journal of Finance and Investment Analysis, 7(3),
45-58.

7. Nigerian Deposit Insurance Corporation. (2019). Annual Report and Statement of Accounts 2019.
Abuja: Nigerian Deposit Insurance Corporation.
 8. Ojo, T. (2016). Exploring the Determinants of Customer Adoption of Agency Banking in Nigeria: A
Case Study of First Bank Customers. Journal of Financial Innovation, 4(2), 78-92.

9. Umar, H. (2021). Assessing the Role of Agency Banking in Promoting Financial Inclusion: Evidence
from First Bank Customers in Nigeria. Journal of Banking and Finance Research, 12(1), 105-120.

10. World Bank. (2020). Nigeria Economic Update: Restoring Macroeconomic Stability and
Promoting Sustainable Growth. Washington, DC: World Bank Group.

Please note that the formatting and style of the references may vary depending on the specific citation
style (e.g., APA, MLA, Chicago) required by your academic institution or publication guidelines.