Agency Banking Broke the Barriers: How Lucas Osagede Transformed Financial Inclusion in Nigeria Through Agency Banking

Lucas Osagede, Co-Founder at LiquidSpace Solution Limited & Sales Director, is an esteemed figure in the financial industry, whose journey has been marked by innovation and dedication to driving financial inclusion in Nigeria. Osagede, in this interview, He discussed his career path, the milestones achieved and his impactful ventures in agency banking and digital finance.

Can you share a brief overview of your journey in the financial industry, highlighting key milestones that have shaped your career? 

My journey in the financial industry has been focused on Business and Retail Banking. I began by promoting Business Banking products at Stanbic IBTC Bank, acquiring new customers and facilitating business operations. I then transitioned to the Mass Market segment of Retail Banking at UBA Bank, where I drove financial inclusion by acquiring new customers and conducting financial awareness training in various locations. 

Next, I joined Diamond Bank’s Agency Banking business, now AccessClosa by Access Bank, where my team setup and launched the new business. This initiative has positively impacted over 100,000 agents, providing them with a means to earn a living. 

Subsequently, I launched UnionDirect, Union Bank’s Agency Banking business, growing it to over 20,000 agents and facilitating over N50 billion in monthly transaction value within 2 years. This made it one of the fastest-growing digital products in the bank. 

I then joined Accelerex Network Limited as the Chief Revenue Officer, overseeing customer growth and revenue generation. Under my leadership, we relaunched the RexAgent network, onboarded over 7,000 customers in less than 6 months, and established multiple service centres across the country to promote customer acquisition and transactions. 

What inspired you to venture into agency banking, and how has your experience been in reshaping this sector? 

When I started at Diamond Bank, my team was tasked with establishing the agency banking business. We noticed a big gap between the general public, especially those who were excluded or underserved, and the traditional banking system. Many excluded individuals believed banks were only for the wealthy, while others found it hard to visit banks during regular hours due to time constraints. This motivated us to reshape the sector.

Could you explain how digital transformation has impacted agency banking in Nigeria, particularly in terms of financial inclusion? 

Agency Banking in Nigeria has been significantly impacted by digital transformation, particularly in terms of financial inclusion. Technology is the foundation of this digital financial service, influencing aspects such as service uptime, infrastructural efficiency, and platform enhancement to meet current and future needs. This transformation has greatly improved financial inclusion by providing access to financial services and delivering various financial products through a network of agents.

Also, firms operating in the Agency Banking sector have created over 30 million accounts, demonstrating the widespread adoption of these services. Additionally, the process of issuing cards to customers has been streamlined, allowing for instant issuance once an account is opened, enabling convenient access to funds.

Moreover, during the period from 2018 to 2020, when there was a mandate for all accounts to be linked to a Bank Verification Number (BVN), agents were equipped with offline BVN registration devices in certain locations. This enabled them to enrol customers on the BVN platform, ensuring compliance with regulatory requirements. 

Some agents continue to enrol customers on the BVN portal to date, highlighting the ongoing impact of digital transformation in the Agency Banking sector.

What innovative solutions have you implemented to scale up agency banking and bridge the financial inclusion gap in Nigeria? 

Answer:

Some innovative solutions implemented include conducting financial literacy training, engaging in social media to drive awareness, running reward programs for agents and customers, and leader-board programs to promote agent participation.

How do you envision the future of agency banking in Nigeria, considering the rapid evolution of digital technologies? 

The future of agency banking in Nigeria is closely tied to the rapid evolution of digital technologies. As technology continues to shape our world, agency banking, a digital product, must evolve alongside it. 

We anticipate that agency banking will remain dynamic, incorporating technological enhancements and modifications. Currently, the pay-with-transfer service has become a widely accepted method for receiving payments within the agency banking space. 

Additionally, we expect the introduction of more cardless payment options, such as QR codes, biometric authentication, and NFC transactions. Through agency banking, the public will gain access to various digital products, including micro pension payments, government collections, local remittances using vouchers, and the implementation of AI for customer data analytics.

What role do you believe collaboration between fintechs, banks, and regulatory bodies plays in driving financial inclusion?

Active collaboration between fintechs, banks, and regulatory bodies plays a crucial role in driving financial inclusion. Banks can utilize fintechs to distribute their products through established digital systems, promoting the adoption of agency banking services and customer acquisition. 

This collaboration also builds trust in fintechs and the process. For example, the interoperable account opening process launched by SANEF allows fintech agents to open accounts for any bank integrated into the scheme. 

In addition, fintechs collaborating with banks can help navigate complex regulations and comply with existing frameworks, while also contributing to policies that protect customers from fraud.

Can you discuss the challenges you faced while launching DiamondClosa (now AccessClosa) and UnionDirect, and how you overcame them?

While launching DiamondClosa (now AccessClosa) and UnionDirect, we faced challenges related to the low acceptance of Agency Banking in the market. These hurdles included concerns about robbery, customer adoption, and liquidity management. 

To address them, we set daily transaction limits for agents to prevent excess cash holding, engaged with local police stations to ensure swift responses in case of robbery, created market awareness to drive transactions to our agents, equipped our agents with our account opening tool to acquire their loyal customers, and assigned agents to specific branches, granting after-hours access for deposits and withdrawals.

In your opinion, what are the key factors that have contributed to the success of AccessClosa and UnionDirect?

Factors contributing to the success of AccessClosa and UnionDirect include an effective and reliable platform, targeted agent acquisition in areas with a need for service, an effective customer interaction channel, providing additional incentives for agents through reward programs, empowering businesses with an additional stream of income, and prompt resolution of disputes.

How do you see the relationship between traditional banking channels and digital financial services evolving in the coming years? 

In the future, bank branches will function as service centres that offer financial advice, tailor made products and other investment opportunities.

Meanwhile, the focus of everyday banking will then be shifted to the use of mobile apps, online channels, and AI chatbots.

Existing customer data will be used by banks to offer personalized services on products they can acquire and protect them from fraud. The wide-adoption of open banking initiative will allow for data sharing between banks and authorized third-party providers. This gives customers access to a wider range of products and services.

The future of financial services will likely involve a cohesive ecosystem involving banks and digital financial providers partnering to offer the public a secure and convenient financial experience.

What advice would you give to aspiring entrepreneurs looking to enter the digital finance space, particularly in the agency banking sector? 

For aspiring entrepreneurs entering the digital finance space, especially in agency banking, I recommend thoroughly researching the market, including target areas, acquisition models, and entry strategies. 

Additionally, ensure compliance with regulations and consider white-labeling a platform. Have a clear, scalable vision and seek guidance from industry experts when needed.

Can you share any upcoming projects or initiatives you’re working on that aim to further enhance financial inclusion in Nigeria? 

We are currently developing a solution that aims to revolutionize merchant business in Nigeria.

Lastly, how do you balance your professional commitments with your passion for giving back to the community through initiatives like tech hubs for business skills training? 

To balance my professional commitments with my passion for giving back to the community through initiatives like tech hubs for business skills training, I have delegated and outsourced tasks while prioritising my core business.

I have also set specific times to track progress toward launching the hub, ensuring nothing suffers. By following these strategies, I can create an enabling environment to groom future industry leaders while fulfilling my commitments.