In order to speed up the development of the agent banking in kenya. In addition, most customers had experienced a transaction failure in agent banks kcb mtaani and lack of liquidity. Pdf mpesa is a mobile phone based money transfer system in kenya which grew at a blistering pace following its inception in 2007. We have all seen these outlets in small and big towns across the country. Agent banking guidelines issued in april 2010 to take effect from 1st may 2010. Dr penelope hawkins feasibility pty ltd and, for the purposes of this paper, finmark trust final paper for the african development finance paper abstract financial inclusion, as measured by the percentage of consumers using. Agency banking coop kwa jirani cooperative bank of kenya. Agent, agent banking, financial literacy, rural kenya, micro and small enterprises introduction according to suoranta and mattila 2004, as technology continues to be an important element in financial service delivery, understanding the factors that influence the behavior of consumers towards using electronic banking technologies. The banks are training agents who will engage in banking services on behalf of the banks. Agent banking connects unbanked people to the mainstream financial system that reduces the economic, social and psychological challenges of financial exclusion.
The main objective of the study will be to identify. Banks have corporate clients who can help cashup the system by paying. The study specifically analyzed the effect of economies of scale and financial services accessibility on banking sectors growth. Key strategies for banks expanding reach to msme segment. Latina america is the region with the strongest development towards banking agents. Investigation on factors facilitating accessibility of. Demographics both models have similar metrics for agent gender, dedication, and exclusivity, but bank agents are more educated than mno agents. Guideline on agent banking, central bank of kenya dfs observatory. Agent banking is governed by the prudential guideline on agent banking issued by the cbk in may 2010. Mno agents in kenya location fsp maps shows 83% of bank agents and 76% of mno agents are rural in kenya, while only 30% of tanzanian and 44% of ugandan mno agents are rural. Investigation on importance of agency banking in provision.
Agent banking is a form of branch less banking whereby a bank enters into a contract with an agent mostly a retail outlet to perform banking services on behalf of the bank. Agency banking which has been around for seven years, is going to see a transformation of branch banking as banks roll out more products to alternative delivery channels. Agents in urban, periurban and rural areasdiscussions also held. Pdf icon guideline on agent banking, central bank of.
The study found out that security, liquidity availability, customers and awareness influence the uptake of agency banking by customers in commercial bank in kenya. Rillo 2 financial inclusion in the peoples republic of china. It ensures that agent banks offer banking services in a cost effective manner, outline their activities, and provide a set of minimum standards of data, network security, customer protection and risk management. Although agent banking has brought about substantial benefits in kenyas banking sector, a number of. It ensures that agent banks offer banking services in a cost effective. Mobile money operators typically leverage an agent network to. Kenya, another country that implemented agent banking in. Agency banking in kenya is the new way that banking in kenya is using to take banking services to the unbanked and under banked at a cheaper rate. Kenya, by contrast, regulators reportedly felt that acting.
Agency banking co op kwa jirani this is a convenient and simple banking model to suit your lifestyle as well as offer you convenience. Can agency banking improve financial inclusion in south africa. Agency banking and financial performance of commercial banks in embu county, kenya irene njoki mbugua master of business administration finance option, kenyatta university, kenya dr. So how have these bank agents benefited kenyans as a whole. Maudrile 2008 did a study on a new agent model for agency banking in colombia. The challenges facing the implementation of agency banking. The relationship between agency banking and financial.
This is because over the last 6 years millions of people, most of whom were financially excluded, have been brought into the formal financial sector through successful rollout of innovative mobile phone financial services products mfs. Select online platform eazzybiz eazzynet eazzychama self service portal eazzy remmittance eazzyfx. Pdf the purpose of this study was to establish the effects of agency. The study used descriptive also known as survey design in which the target population was branch managers agent banking mangers and agent banking consultants in selected kenya commercial bank.
The study also found that security of agent banks in kenya was bad. The companies act, the central bank of kenya cbk act and the banking act are the main regulators and governors of banking industry in kenya. The rise of agency banking in kenya published on july 1, 2015 july 1, 2015 15 likes 4 comments. Home equity corporate site equity bank kenya limited. In kenya, banks are now also driving agent banking, and while they do seem to be adding value to the system they have yet to reach the scale of agents mobile money providers have on the. Effect of agency banking services on customer satisfaction. A case of equity bank in kitui central district, kitui county, kenya. The bank develops financial products and services but distributes them through retail agents who handle most customer interaction. Despite having an expansive network, it is still very much tethered to banking infrastructure for rebalancing. Various statistical and analytical methods were used to process the primary data into presentable and understandable format.
Pdf diversity of global agent banking models and its. Due to the foregoing it was important to evaluate the influence of agent banking on banking sectors growth. Job omagwa department of accounting and finance, school of. Kenyas first fully locally owned commercial bank was the cooperative bank of kenya, which was initially a cooperative society. Agent banking, the revolution in financial service sector. Microsave briefing note 6 structuring and managing agent network i puneet chopra with inputs from graham a. Delegation comprised of 6 representatives of central bank of kenya, kenya bankers association and the ministry of finance. Guidelines on agent banking for the banks 1 guidelines on agent banking for the banks 1. Investigation on importance of agency banking in provision of banking services in kenya. Agency banking outlets extend banking services in kenya. Operational challenges of agent banking systems page 3 of 3 managing the channel agents will not provide quality service to customers without ongoing, onsite supervision and instore training to ensure the agents are liquid, consistently branded, and following the prescribed business processes.
It served the needs of growing farming communities and started operations in 1968. As time progressed, the changing landscape of banking began to note the entrance of fully indigenous banks. Effect of agency banking services on customer satisfaction in ongata rongai under the kenya commercial bank, rongai branch. This is why banking agents are part of an increasingly. Cash withdrawals from coop account sacco account fethalink cash deposits to coop account sacco account fethalink. Agency banking took effect in kenya in may 2010 after the publication of prudential guidelines by the central bank of kenya. The study recommends further research on customer satisfaction and how it influences the growth of agency banking in kenya. Mobile money services a bank in your pocket an overview of trends and opportunities 7 their accounts and to perform transfers and payments.
These acts are used together with the prudential guidelines which central bank of kenya issues from time to time. Central bank of kenya is the regulating authority with 45 banking institutions whereby 44 are commercial banks and 1 is a mortgage finance company. The banking sector was liberalized in 1995 and exchange controls lifted. Most of the individuals in kenya especially those living in rural or remote areas where infrastructural development is a problem,access to banking. Pioneering banks, microfinance institutions, and mobile operators started to experiment with banking agent networks in various countries around the world such as brazil, peru, colombia, kenya, mexico, pakistan, the philippines, and south africa. What services are available at a coop kwa jirani agent. Focus on agency banking in kenya metric comparison of bank vs.
Agent banking in latin america 05 11 in this chapter, the term banking coverage is used to refer to bank branches or agents operated by commercial or stateowned financial institutions and mfis in countries where mfis are regulated and allowed to operate through agents. Agency banking model is a function of certain commercial banks in kenya and as regulated by central bank of kenya legislation that allows them to contract third party retail networks as banking agent. This relationship creates an agency banking business. This indicates that bank customers are gaining more trust in agents and are increasingly opting to. A sample of three hundred and eightyone respondents 381 was used in. Challenges of agent banking experiences in kenya hrmars. Banking in kenya, september 14th 2011 agency banking application form an agent application form is sent to central bank for approval before the agent can start transacting on behalf of the bank. Cbk has since granted approval to 10 banks for the rolling out of their agency networks. Agent banking in kenya in kenya large number of the population is excluded from access to financial services in the financial sector with the situation being worse in rural areas. Guideline on agent banking, central bank of kenya this guideline provides a framework for the conduct of agent banking business. Kenya the most basic version of agent banking is whereby a licensed financial institution typically a bank delivers financial services through a retail agent.
As many groups have matured, their need for a more secure place to keep their savings and excess cash, as. Banking agents and the bank itself coordination influences the growth of agency banking in kenya. Can agency banking improve financial inclusion in south. Financial inclusion in asia asian development bank. Challenges associated with adoption of agency banking and. It does not take into account the presence of cooperatives or other unregulated financial institutions. According to the central bank of kenyas guidelines on agent banking, a bank agent. November 2012 the agent networks one of the most critical and complex to manage any system constituents of delivering electronicmobile banking. This study therefore, sort to analyse the utilization of. This alternative financial service has been growing in the developing countries for last. This service is therefore only available to people who possess a formal bank account. Agent banking operations as a competitive strategy of. In kenya, these agents are increasingly utilized as important distribution channels for.
On enrollment kenya has a significantly higher percentage 79% and a much lower percentage on money transfer 3%. A fee of kenya shillings 1,000 per agent is required. Upon successful application, vetting and approval, these agents are authorized to offer selected products and services on behalf of the bank. Preamble in exercise of the powers conferred on the bank by section 2 d of the central bank of nigeria act, 2007 and section 57 2 of the banks and other financial institutions act. An investigation on slow adoption of agent banking.