Challenges Facing Agency Banking in Kenya- A Case of Selected Commercial Banks
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Date
2012-04
Authors
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Publisher
Daystar University, School of Business and Economics
Abstract
Banks all across the world have looked for ways and means of extending their reach. This has led to expansion through opening up new branches. However, this is not feasible especially in areas where transaction volumes cannot justify the cost of setting up branches. To address this problem, banks are increasingly looking for alternative ways to reach and serve their customers. The advent of technology has provided alternative means that banks can use to serve their customers such as ATMs, mobile banking, internet banking and more recently agency banking.
The purpose of this study was to establish agency banking challenges among commercial banks in Kenya. The study sought to establish the reasons why agency banking uptake by commercial banks had been slow within the Kenyan banking industry. The objectives of the study were to establish the critical factors that influence agency banking, to determine the extent of adoption of agency banking, to determine the agency banking challenges among commercial banks and to establish the future of agency banking in Kenya.
The study sought views from banks that had implemented agency banking as well as those that had not. Banks are classified into three categories namely Tier I, Tier II and Tier III depending on the size of the balance sheet. The study focussed on all the three tiers. The study employed questionnaires as the main data collection instruments. Responses in the questionnaires were then tabulated, coded and processed by use of statistical computer software known as Statistical Package for Social Science (SPSS) to analyze the data and the results presented in tables, charts and graphs.
The results of the study revealed that agency banking had faced several challenges among them; high illiteracy levels especially in rural areas, fear of breach of confidentiality of customer information by the agents, lack of awareness of agency banking services and stringent KYC requirements. In addition, the registration process as guided by CBK rules was deemed to be lengthy.
Despite the challenges, agency banking was still considered by majority of the industry players as an important alternative to setting up a physical bank branch as it reduced operational costs as well as increased accessibility to banking services.
Description
Master of Business Administration in Strategic Management and Finance
Keywords
Banks, ATMs, mobile banking, internet banking and more recently agency banking
Citation
Kirika, N. N. (2012). Challenges Facing Agency Banking in Kenya- A Case of Selected Commercial Banks. Daystar University, School of Business and Economics