Branchless banking

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Branchless banking is a distribution channel strategy used for delivering financial services without relying on bank branches. While the strategy may complement an existing bank branch network for giving customers a broader range of channels through which they can access financial services, branchless banking can also be used as a separate channel strategy that entirely forgoes bank branches. According to a 2011 survey, 62% of respondents said the Internet is their preferred banking method. Only 20% selected branch banking - a sharp decline compared with 2007 when 40% of respondents preferred to bank at a branch.[1]

Examples of branchless banking technologies are the Internet, automated teller machines (ATMs), POS devices, EFTPOS devices and mobile phones. Each of these technologies serve to deliver a set of banking services and are part of distribution channels that may be used either separately or in conjunction to form the overall distribution channel strategy.

For example, Cooperative Bank of Kenya uses the Internet, ATMs, POS devices, EFTPOS devices, and mobile phones as technologies to deliver its banking services through a combination of distribution channels including stationary bank branches, mobile bank branches, ATMs, bank agents, Online banking, and mobile banking. All of these are distribution channels, yet only the last four are branchless distribution channels and form part of Equity Banks's branchless banking strategy (Equity Bank refers to its branchless banking channels as alternate delivery channels[2]).

First Direct in the United Kingdom are an early pioneer of this class of service. Launched by the then-Midland Bank (now part of HSBC) in 1989, first direct's accounts are operated solely via the Internet, post, or (principally) telephone, and they do not themselves operate any retail branches (although HSBC branches can be used to make deposits) while at the same time offering a full range of banking services. Smile are a similar venture, again operating solely via the Internet and telephone.

Branchless banking technologies and distribution channels should be distinguished from each other as the two may overlap, which can be confusing: ATMs and mobile phones can be technologies and distribution channels, while POS and EFTPOS devices are only technologies but not distribution channels—rather, the latter two technologies are placed at points of sale through other distribution channels such as agents, which are usually retail outlets that allow their customers to pay for purchases by using their debit or credit cards. For an overview of distribution channels and technologies used in branchless banking and how they differ, see Porteous (2008, p. 4).[3]

Mobile phone branchless banking[edit]

Mobile phone branchless banking has successfully functioned mainly in Kenya with 7 million customers, followed by South Africa and Philippines. In March 2011, a pilot project mobile phone branchless banking was launched in Bali, Indonesia by the country's biggest bank.[4] The advantages of mobile phone branchless banking:

  • very mobile, (users and agents)
  • open up to 24 hours a day, depends on the agents
  • very small fees for the agents
  • may withdraw or deposit a small amount such as $1 (less than limit of the automated teller machine)
  • no need for a bank account, only a mobile phone number
  • almost no paperwork (administration)
  • generate low income for thousands of agents
  • very small bank overhead
  • suitable for many people with low income
  • suitable for many people with low literacy
  • reduced transportation costs and time due to close proximity to multiple agents

In March 2013, Indonesia launched nationwide campaign of branchless banking initialized with 4 major banks:[5]

All above banks are go public companies with its IDX code.

See also[edit]


  1. ^ PwC December 2012, from
  2. ^ Mwangi, J. (2007, September 19). Equity Bank: Alternate Delivery Channels [Presentation]. Retrieved February 4, 2009, from
  3. ^ Porteous, D. (2008, October). Mobile money: the world and PNG [Presentation]. Retrieved January 24, 2009, from
  4. ^
  5. ^ Grace D. Amianti (March 27, 2015). "Four major banks launch branchless banking program".