The emerging models relying on “banking agents” will greatly extend the distribution of financial services to the poor and marginalized segments. Secondly, alternative delivery channels promise significant cost reduction to institutions. The traditional microfinance business is based on personal, one-on-one relationships. Thus, personnel expenses often account for a  BIS central bankers’ speeches  1  significant portion of microfinance operating expenses.
The use of banking agents will help to reduce the operating costs of the sector. The recent development in mobile phone banking is highly encouraging. The expansion in the retail network of microfinance has arisen overwhelmingly from agents and mobile phone channels. Within a span of just two years, there are now almost 18,000 branchless banking outlets surpassing the 10,000 conventional bank branches.