Academic journal article Academy of Accounting and Financial Studies Journal

Agent's Competency to Work Engagement on Branchless Banking Implementation

Academic journal article Academy of Accounting and Financial Studies Journal

Agent's Competency to Work Engagement on Branchless Banking Implementation

Article excerpt


Work engagement is an interesting topic related to improving business performance because by maintaining work engagement will increase employee's performance (Markos & Sridevi, 2010) that also affected company's performance through business outcomes (Harter, et al, 2002). Employee's performance in analyzing credit provision can also affected banking performance (Wiryono & Effendi, 2018). This study then develops based on various perspectives such as a marketing perspective that discusses consumer engagement and the perspective of Human Resource Management (HRM) which discusses employee's engagements and work engagements. Based on the perspective of Human Resources, engagement is a condition of individual presence in a psychological form that involves two important components of attention and absorption (Rothbard, 2001). Meanwhile Schaufeli et al. (2002) define engagement as a positive thinking state characterized by strength, dedication and commitment and the difficulty of escaping from work (absorption). Work engagement shows a strong relationship with productivity, profitability, employee retention, and customer satisfaction (Ekpete and Iwedi, 2017; Adusei, 2018). While the element of work engagement can be seen based on three factors, namely psychological significance, security and feelings that are present positively (May, Gilson, & Harter, 2004).

Previous studies have discussed about employee's work engagement and the impact to performance (Markos & Sridevi (2010), Xanthopoulou, et al. (2009), Harter, et al. (2002)), but there has not been studies that discuss about company's partner as an object of the study. It is interesting and need to discuss more if it is a partner that has a role and function as a company's employee. In banking cases, there are bank's partner that has the same role and function with bank's operator when they implement branchless banking. As we know that branchless banking implementation is one of banking strategy to reduce operational cost and increase profitability (Abedin & Dawan (2016) and Javaid & Alalawi (2018)). Beside that, it also aims to manage credit risk of commercial banks (Abiola & Olausi, 2014). Because of this background, this study will examine further the agency's work engagement when it is associated to the implementation of branchless banking.

Branchless banking is the metamorphosis result of innovation efforts in the banking world which is defined as a theory where the bank does not have a physical branch location (Prendergast & Marr, 1994), but offers services only through the internet, mobile banking, ATMs and third party agents for deposit or withdrawal of funds (Sayar & Wolfe, 2007) Branchless banking implementation requires several basic elements, namely: technology, third party agents, storage and withdrawal services, and additional payment services. This is in line with the process of innovation diffusion which is explained in the diffusion theory of innovation according to Hsing, (2014), where the continuity of diffusion of innovation is possible because it is influenced by supporting elements, namely innovation, communication channels, time and social systems.

Empirically, based on data from the Financial Services Authority (OJK) shows that agent "Laku Pandai" as a distribution channel from branchless banking grew rapidly in Indonesia. Nevertheless, the problem faced today is the distribution of inequality of agents that are still concentrated in Java Island 68.02%. While Sumatra is only 18.31% and the rest is spread in Eastern Indonesia (Financial Services Authority, 2017). The following figure shows the distribution diagram of agents in Indonesia:

Another problem based on preliminary research (LPEM FEB UI 2017) shows that one of the obstacles to the implementation of branchless banking in Indonesia is the non-engagement of agents to their partner banks, where the results of this study found an agent who acts as a Laku Pandai agent as well as a Basic Financial Service Agent. …

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