First Global to take lead on agency banking - Finds workaround to barrier for new accounts
First Global Bank faces limitations on the range of services it would like to offer through an agency banking network, based on the rules set by the Bank of Jamaica, BOJ, but is preparing to launch its first operation soon, having found a way around the barrier against opening new accounts.
It would make First Global the first commercial banking operation to test the new system for which the rules were finalised last year.
President and CEO Mariame McIntosh Robinson says the bank is targeting a store on Washington Boulevard "within the next two or three months" as its first agent, but still awaits BOJ sign-off.
"The BOJ has not granted approval for any specific location as yet. The first is imminent," McIntosh Robinson told the Financial Gleaner.
The agency banking model allows retailers and other non-bank businesses to provide banking services on behalf of marquee commercial banks. It does not permit user fees and restricts the services offered.
First Global, a subsidiary of conglomerate GraceKennedy Limited, will roll out its agency banking network through FG MoneyLink, the same unit under which its satellite branches operate.
First Global is not overly concerned about the inability to charge fees at the agent window, according to McIntosh Robinson, who says "driving profit through fees for this channel was not an immediate priority or strategy"; and that the channel rather serves as a means through which the bank's products and services would become more accessible to persons that the retail network does not easily reach.
However, the restriction on opening new bank accounts at the agent window was seen as a key challenge, one the bank plans to overcome through online links with MoneyLink, which falls under First Global's retail banking unit.
"Agent banking provides for only a portion of our services to be available, with the key service of new account opening not being available. This limits our ability to deliver FG MoneyLink agent locations in communities with no access to a traditional FGB branch where they can open an account," said the bank president.
"However, every agent location will be connected to a FG MoneyLink satellite venue where new accounts can be opened," she said.
MoneyLink includes all extensions of First Global's retail banking operations, similar to traditional branches, and gives the bank reach in the market where it represents a small four per cent share of a sector valued at $1.35 trillion.
"Each of our satellite and agency branches are, or will be, affiliated to a traditional branch close by, called a 'home branch'," said McIntosh Robinson.
"The branch manager of the home branch leads the affiliated satellite or agency branch as well. As an example, the Santa Cruz FG MoneyLink is connected to FGB Mandeville."
The satellite locations are manned by First Global staff, including a customer service representative and a teller. For agent locations, staff members are employed by the agent owner.
All MoneyLink satellite branches currently operate from GK Money Services locations - another member of the GraceKennedy group - and are present in Cross Roads, Santa Cruz, Linstead and Hopewell.
"The slightly different name to First Global Bank differentiates the provision of specific products more in-tune with the needs of the communities these branches operate in," said McIntosh Robinson. "It allows us to be able to provide different rates for services, giving these customers a more differentiated experience."
First Global Portmore, which opened last December, was initially planned as the first agent banking outlet, but was subsequently expanded into a full-service branch under GraceKennedy's $2-billion upgrade of other stores, including its local Hi-Lo supermarket.
"We think Portmore and its environs - Spanish Town, etc - provide great opportunities to connect with new and existing customers. We therefore thought it best to provide a larger space and the full service of a traditional branch, including ATMs and video teller machines. This would not have been possible in an agent location," said McIntosh Robinson, explaining the switch.
"With the agency banking model, less services are offered to our customers via a third party, usually in a smaller location."
Asked why First Global remains interested in agent banking when it already has access to its parent company's grocery retail chain Hi-Lo and GK Money Services, McIntosh Robinson said it allows the bank to expand its network "anywhere in the island and not be limited to the footprint of brands in the GraceKennedy Group".