The study selected 4 senior managers from each bank thus forming a sample size of 36 respondents who was used in this study. What services are available at a coop kwa jirani agent. This study sought to establish the role of agency banking model in promoting service delivery in equity bank in kenya taking a case study of. Pages in category banking in kenya the following 4 pages are in this category, out of 4 total. Jun 15, 2016 the banking sector in kenya is ever evolving. Follow this stepbystep guide to invest in treasury bills through the central bank. It is noteworthy that since ecobank kenyas entry into the kenyan market in june 2008, the bank has grown its branch network from 9 to the current 20 branches including the head office. The agencybanking model introduced in 2010 after the amendment. Kenyan banks recorded significant improvement in agency banking introduced six years ago.
Agency banking rollout in kenya was meant to address the low financial inclusion in kenya. Agency banking co op kwa jirani this is a convenient and simple banking model to suit your lifestyle as well as offer you convenience. The cbn shall have free, full, unfettered and timely access to the internal systems, documents, reports, records, staff and premises of. Kenyas financial transformation in the 21st century aws. The stakeholders should participate in rolling out of mobile financial. Kenya listed commercial banks cytonn q1 banking sector report. The study also sought to establish how security, liquidity availability, customers and awareness influence the uptake of agency banking by customers in commercial bank in kenya. Among the recommendations are regulatory engagement to address the. In 1971, kenya commercial bank was formed as a result of the merger between national and grindlays bank with the governing owning a stake of 60 percent. Kenyas banking sector overview kenya currently has 43 commercial banks, all regulated by the central bank of kenya 20 12 20 in kenya there are a total of 43 commercial banks, 10 microfinance banks and 1 mortgage finance institution all banks are regulated by the central bank of kenya. Financial inclusion in kenya has continued to rise, with the percentage of the population living within 3 kilometers of a financial services access point rising to 77. Among the recommendations are regulatory engagement to address the barriers to. The agency banking model introduced in 2010 after the amendment. Effect of agency banking services on customer satisfaction.
Kenyan banks record growth in agency banking model. Cooperative bank of kenya opened its doors in the year 1968. Demographics both models have similar metrics for agent gender, dedication, and exclusivity, but bank agents. Boakenya sponsored annual general meeting and dinner dance of the law society of kenya. Agent banking operations as a competitive strategy of. As of december 31st, 2010, the country included 1,063 bank. The origin of commercial banking in kenya related to commercial connections in east africa, which existed towards the end of the 19th century. The commercial banking industry in kenya has been in a state of constant change that due to economic liberalization, competition has become stiff, forcing commercial banks to conform to the changing economic environment. Investigation on importance of agency banking in provision of banking services in kenya. The challenges facing the implementation of agency banking in. The banking industry in kenya has also involved itself in automation, moving from the traditional banking to better meet the growing complex needs of their customer and globalization challenges.
Brazil and colombia identified as champions in agent banking. There are few african countries that have taken up agency banking. The sector is dominated by multinational banks such as standard chartered, barclays, etc. May opened kisii branch in western kenya and meru in the central region. Ottoman bank and commercial bank opened offices in kenya between 1951 and 1958. We have organized our business to offer solutions in order to meet the requirements of our sme customers through a dedicated relationship management approach.
Introduction of agency banking through an amendment of the banking act. Investigation on factors facilitating accessibility of. Agency banking aka branchless banking is quickly emerging as a way to offer services to those without banking access. Facilitates branchless bankingagency banking models. Challenges of agent banking experiences in kenya fred gichana atandi. Contribution of agency banking on financial performance. The history of land in kenya nairobi own land in kenya. Kenya listed commercial banks cytonn q1 banking sector. Spare a thought for the smallscale miner and dress maker. The agency banking in kenya guidelines were enacted in 2010.
Central bank, their contracts and the banking policy. The banks are training agents who will engage in banking services on behalf of the banks. At the moment, three banks have been placed under receivership with only one having recovered and back to operations. Agency banking was introduced in kenya in 2010 according to opm 2011. In kenya, agency banking has been the fastest growing in terms of agents share. The general objective of this study was to establish the factors influencing the uptake of agency banking services by customers in commercial banks in kenya. Kenya listed commercial banks analysis cytonn home. As per the 2009 national financial access survey, 32% kenya. A sample of three hundred and eightyone respondents 381 was used in. Oct 16, 2014 the kenyan banking sector is composed of 52 institutions, including 43 commercial banks, 1 mortgage finance company and 8 deposittaking microfinance institutions.
Can agency banking improve financial inclusion in south. Financial institutions are constantly looking at new ways to reach the unbanked and serve existing customers better. The potential, power of agency banking the standard. The banking industry in kenya is governed by the companies act, the banking act, the central bank of kenya act and the various prudential guidelines issued by the central bank of kenya cbk. Agency banking is a model that is aimed at enhancing financial inclusion by reaching out to millions of people in need of financial services. In the same year, the national bank of kenya became the first fullyowned government bank. Investigation on importance of agency banking in provision of. Discussions with afi commenced in june 2009 with formal request for short term grant submitted in late june 2009.
This led to the collapse of the east africa currency board eacb in mid 1960s. Banks must first apply to central bank of kenya to get approval to conduct agency banking business. The history of banking in kenya precedes the countrys independence in 1963. The lack of offerings means potential for product innovation 79% agents are contributing to client growth in contrast to tanzania 36% or uganda 33%. Regression analysis showed that atm, mobile banking, use of credit and debit cards, internet banking and agency banking all have positive significant influence on commercial banks performance in kenya. Jul 01, 2015 according to the central bank of kenyas guidelines on agent banking, a bank agent means an entity that has been contracted by an institution and approved by the central bank to provide.
The stakeholders should be drawn from both the public and private sectors. It was followed by standard bank of south africa in 1910. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. The results show that internet banking use in kenya is very low.
According to the central bank of kenyas guidelines on agent banking, a bank agent means an entity that has been contracted by an institution and approved by the central bank to provide. Rise of agency banking in kenya mahindra comviva blog. Challenges of agent banking experiences in kenya request pdf. Mauricio and maudrile 2008 did a study on a new agent model for agency banking in colombia. The banking sector was liberalised in 1995 and exchange controls lifted. Despite the numerous economic challenges that have been witnessed within the sector, the industry remains strong and vibrant. It has been used very well in latin america and asia. Pdf the role of agency banking in promoting financial. Agency banking in kenya requirement agents must also through the banks that sponsor them apply to run agency banking in kenya business. The power of agency banking is massive and it helps reduce financial and economic exclusion. In the year 1955, the ottoman bank and the commercial bank of africa were established. Kenyas first fully locally owned commercial bank was the cooperative bank of kenya, which was initially a cooperative society. Investigation on importance of agency banking in provision.
Agency banking outlets extend banking services in kenya. Mpesa, mshwari, agency banking and local language bank staff acting as examplars for. In 1968 national bank of kenya took over the ottoman bank. April held cool kids quarterly emptying day, an event for children account holders. Overall, the study was very important as it tells how financial inclusion in tanzania has been accelerated by use of agency banking practices. No unauthorized loans, no unreported collections, head office and branch managers have realtime information on business transactions. Request pdf on aug 23, 20, fred gichana atandi and others published challenges of agent banking experiences in kenya find, read. According to bank supervision and annual report 2014, the banking sector in kenya comprise of the 44 banking institutions, 9 microfinance banks, 2 credit reference bureaus, 87. Overview of the banking industry in kenya stephenson harwood llp to view this article you need a pdf viewer such as adobe reader. Highly efficient and cost effective approach in deploying and managing a network of partner agents 2. A system with the potential to obliterate the historical hurdles of cost and free access which have for a long time stood in the way of willing partakers of banking services evokes immediate attention and interest.
Mobile banking 26% transaction number via agency banking 17% transaction value via agency banking 12% transaction value via mobile banking average revenue per month per agent. Effect of agency banking services on customer satisfaction in ongata rongai under the kenya commercial bank, rongai branch. Participation in the group bank of africa network management meetings, in dakar, senegal. Agency banking solution agency banking services jmr infotech. The establishment of the bank was a direct result of the desire among the three east african countries to have independent monetary and financial policies. Overview of the banking industry in kenya lexology. Spare a thought for the village welder, the potter in macheke, banana farmer in chimanimani and honde valley. It is observed that the involvement of key stakeholders in implementation of agency banking cannot be understated opm, 2011. This indeed shows the level of confidence that the board and the management of. To investigate the role of agency banking in facilitating accessibility of banking services through agency banking in kenya. Kenya banking sector overview financial inclusion in kenya continues to rise, driven by mobile and digital channels 14% 20% 29% 38% 0% 28% 62%.
A system with the potential to obliterate the historical hurdles of cost and free access which have for a long time stood in the way of willing partakers of banking services. The kenyan banking sector is composed of 52 institutions, including 43 commercial banks, 1 mortgage finance company and 8 deposittaking microfinance institutions. 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. Kcb targets agency banking to cement market position. Agency banking as an expansion strategy for kenya commercial. The implementation of agent banking services in kenya is a testament to this fact. The paper concludes that addressing the barriers to agency banking will be necessary, but not sufficient, to improve financial inclusion. Banking industry in kenya the companies act, the central bank of kenya cbk act and the banking act are the.
This is despite the high rate of internet access recorded. Establishment of the bank the central bank of kenya was established in 1966 through an act of parliament the central bank of kenya act of 1966. The population of the study was 9 commercial banks offering agency banking in kenya. 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. Pdf competitive strategies adopted by bank of india kenya. Agency banking coop kwa jirani cooperative bank of kenya. The agency banking network approval requires some conditions to be met together with completing the agency banking network application form. A case of equity bank in kitui central district, kitui county, kenya. However, in kenya, how the utilization of agency banking has contributed to the performance of these banks is not documented. Developing its own agent networkthe case of equity bank in kenya. Focus on agency banking in kenya metric comparison of bank vs. According to central bank of kenya statistics on the distribution of agents, 87% are with 3 banks equity bank with 25,428 agents, kenya commercial bank with 12,883 and cooperative bank with 8,856 agents. Agency banking is then seen to bring the services closer to the customers and now days people in remote areas do not need to travel to towns to get financial services.
The model aimed at improving financial inclusion in the country. As a retail banking option, this model is flexible and can meet local needs. 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. The challenges facing the implementation of agency banking. Agency banking is a type of branchless banking where third parties are involved in performing some of the activities that are traditionally performed in banking halls by bank personnel. Cash withdrawals from coop account sacco account fethalink cash deposits to coop account sacco account fethalink. While agency banking is now offering savings services, not a great enough percentage of agents are involved to showup here. First of all there was national bank of india in kenya in 1896 after the establishment of the british in the region.
The main objective of the study will be to identify. The analytical results of the study show that agency. In terms of branchless banking, kenya is probably best known for nonbankbased models. The internet banking use is popular to both the male and the younger generations.
We offer an extensive range of financial solutions which are tailored to meet the needs of our customers. Insider fraud may be particularly expensive due to agency problems. A sample of three hundred and eightyone respondents 381 was used in the study from the target. It served the needs of growing farming communities and started operations in 1968. The nonbank led model of agent banking is a general agency arrangement where parties other.