A recent MSC (MicroSave Consulting) study in Bangladesh, India, and Kenya found that 48% of customers stopped using agent-based services, while 20% switched to other channels like ATMs and mobile apps.
“This study aimed to identify the key factors driving customer retention and attrition at agent points. We found that convenience and trust are crucial in promoting the use of cash-in and cash-out (CICO) agents,” said Akhand Jyoti Tiwari, Partner, MSC.
CICO agents have significantly improved access to financial services in unserved and underserved areas, particularly for low-income households. Previous MSC studies have highlighted key attributes that customers value in an agent.
The current study, conducted between March 2023 and August 2024, found that customers with a household income below USD 135 use agent services more frequently than those earning above that threshold. This is likely because lower-income groups, often comprising less-educated daily wage laborers, rely more on agents for daily transactions.
Customers choose agents based on two factors: trust and convenience. Respondents preferred trustworthy agents who are familiar, work with reputable financial service providers (FSPs), or operate well-branded shops. Convenience is driven by proximity, fast service, and good customer support, while trust comes from familiarity, strong branding, and reliable FSPs. Poor or suboptimal customer service negatively impacts customer experience and usage of agent services, the study found. According to the survey, 52% of customers continue using the same agent due to trust and convenience. Female customers, in particular, rely more on agent support than male customers.
“We observed certain gender differences across many attributes attached to these factors. The availability of customer support (~40%) at the agent point contributes more to female customers’ continued use of agents for financial transactions than for male customers across these three countries,” said Akshat Pathak, Associate Partner, MSC.
The survey also found that over half of customers in Bangladesh (56%) and Kenya (51%) stopped using CICO agents, partly due to COVID-19 lockdowns, which hurt agent incomes but accelerated the shift to self-initiated digital transactions. In rural areas of these countries, customers were more likely to stop using agents due to poor access and the distance to agent points.
The situation in India is different, as fewer customers (37%) have stopped using CICO agents post COVID-19. “This highlights the essential financial needs of low-and-moderate-income (LMI) customers that assisted channels like CICO agents can meet. Negative feedback about the agent (64%) or the perceived risk of fraud and data leakage (46%) by the agent erodes customers’ trust in agents” said Akshat Pathak, Associate Partner, MSC.
MSC’s previous studies revealed that many customers avoid agents due to concerns about data confidentiality within their communities, which undermines both trust and convenience.
Disrespectful agent behavior (48%) and high service costs (40%) also contribute to poor customer experiences. Research shows agents often charge unauthorized fees, particularly in Bangladesh and India, driving customers away. In Kenya, the higher cost of using agents compared to ATMs and bank branches further discourages use of agents.
“However, we did not observe any statistically significant gender differences in the decision to stop using CICO agents based on these factors,” said Akshat Pathak, Associate Partner, MSC.
Policy and technology improvements enhance access to agents, boost customer support, and lower costs by preventing overcharging. The study shows that 56% of customers in Bangladesh still do not have the convenience of access to an agent due to lack of proximity to the agent’s outlet. In India, 37% of customers have stopped using CICO agents due to limited access to agent points. India has around 2 million CICO agents, out of which about 33% are inactive.
Despite the popularity of traditional services, MSC recommends that CICO agents evolve beyond traditional services like money transfers, deposits, and withdrawals, as current offerings may not sustain long-term viability.
“Providers should explore new service avenues, such as logistic services in Kenya and wealth management in India and Bangladesh, to ensure sustainability for CICO agents,” said Akhand Jyoti Tiwari, Partner, MSC.
Expanding services to include government payments and insurance could help integrate CICO agents into the community’s financial habits. Ultimately, agents could evolve to offer a “universal” range of financial and non-financial products.
There is also a need for improved customer service at the agent level. Mobile network operators (MNOs) and agent network managers (ANMs) should invest in resources to support compliant agents through ongoing communication, dedicated customer care, and feedback.
MSC recommends simplifying transaction processes to enhance user experiences and boost satisfaction for both agents and customers. MSC also suggests conducting awareness campaigns to educate low- and middle-income (LMI) consumers about common fraud techniques. “This combined strategy of simplification and education aims to ensure safety and foster trust in the system by minimizing fraud incidents,” said Akhand Jyoti Tiwari, Partner at MSC. Additionally, there is a need to diversify use cases at CICO agent outlets to better address women’s needs.
Dynamic CICO businesses must consider several factors to develop sustainable networks. Service providers can enhance these networks by improving access to agents, boosting customer support, strengthening fraud prevention, increasing agent reliability, and establishing effective grievance resolution mechanisms.
These findings align with CGAP’s “outcome model”, which emphasizes that agent accessibility, quality, and reliability are essential for effective networks.
MSC surveyed 1,520 customers—522 in India, 484 in Bangladesh, and 514 in Kenya—who had used a CICO agent at least once, ensuring equal gender representation (50:50) and a rural-urban ratio of 60:40.