Kenyan banks recorded significant improvement in agency banking introduced six years ago. April held cool kids quarterly emptying day, an event for children account holders. While agency banking is now offering savings services, not a great enough percentage of agents are involved to showup here. The challenges facing the implementation of agency banking in. Highly efficient and cost effective approach in deploying and managing a network of partner agents 2. Munyaradzi nyakwawa is a digital financial services consultant and financial inclusion analyst. It was followed by standard bank of south africa in 1910. Spare a thought for the village welder, the potter in macheke, banana farmer in chimanimani and honde valley. Kenya listed commercial banks cytonn q1 banking sector report. Cash withdrawals from coop account sacco account fethalink cash deposits to coop account sacco account fethalink. Focus on agency banking in kenya metric comparison of bank vs.
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. Agency banking solution agency banking services jmr infotech. The agency banking network approval requires some conditions to be met together with completing the agency banking network application form. There has been increased competition from local banks as well as international banks, some of which are new players in the country.
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. If you have any feedback or complaint, please talk to us on. The paper concludes that addressing the barriers to agency banking will be necessary, but not sufficient, to improve financial inclusion. First of all there was national bank of india in kenya in 1896 after the establishment of the british in the region. The agency banking in kenya guidelines were enacted in 2010. Developing its own agent networkthe case of equity bank in kenya. Agency banking aka branchless banking is quickly emerging as a way to offer services to those without banking access. Request pdf on aug 23, 20, fred gichana atandi and others published challenges of agent banking experiences in kenya find, read. As of december 31st, 2010, the country included 1,063 bank. However, in kenya, how the utilization of agency banking has contributed to the performance of these banks is not documented. Agency banking coop kwa jirani cooperative bank of kenya.
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. What services are available at a coop kwa jirani agent. It has been used very well in latin america and asia. It is observed that the involvement of key stakeholders in implementation of agency banking cannot be understated opm, 2011. 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. To investigate the role of agency banking in facilitating accessibility of banking services through agency banking in kenya.
Ottoman bank and commercial bank opened offices in kenya between 1951 and 1958. 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. We offer an extensive range of financial solutions which are tailored to meet the needs of our customers. Pdf the role of agency banking in promoting financial.
Despite the numerous economic challenges that have been witnessed within the sector, the industry remains strong and vibrant. The results show that internet banking use in kenya is very low. Kenya listed commercial banks analysis cytonn home. Banking industry in kenya the companies act, the central bank of kenya cbk act and the banking act are the. 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. The power of agency banking is massive and it helps reduce financial and economic exclusion. The sector is dominated by multinational banks such as standard chartered, barclays, etc. Investigation on importance of agency banking in provision of. We have organized our business to offer solutions in order to meet the requirements of our sme customers through a dedicated relationship management approach. Pdf competitive strategies adopted by bank of india 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%. Investigation on factors facilitating accessibility of. Mauricio and maudrile 2008 did a study on a new agent model for agency banking in colombia. 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.
The stakeholders should participate in rolling out of mobile financial. 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 history of land in kenya nairobi own land in kenya. The agencybanking model introduced in 2010 after the amendment. Kenya listed commercial banks cytonn q1 banking sector.
Challenges of agent banking experiences in kenya fred gichana atandi. 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. 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. As per the 2009 national financial access survey, 32% kenya. 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. 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. Banks must first apply to central bank of kenya to get approval to conduct agency banking business. The origin of commercial banking in kenya related to commercial connections in east africa, which existed towards the end of the 19th century.
Jun 15, 2016 the banking sector in kenya is ever evolving. Facilitates branchless bankingagency banking models. 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 operations of banks in kenya are regulated by the banking act cap 488, companies act cap 486, and the central bank of kenya. Discussions with afi commenced in june 2009 with formal request for short term grant submitted in late june 2009. Effect of agency banking services on customer satisfaction. Demographics both models have similar metrics for agent gender, dedication, and exclusivity, but bank agents. The main objective of the study will be to identify. 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. Agency banking as an expansion strategy for kenya commercial. Kenyas first fully locally owned commercial bank was the cooperative bank of kenya, which was initially a cooperative society. Investment banks in kenya march, 2015 january 6, 2018 mwangijmn banking industry in kenya the companies act, the central bank of kenya cbk act and the banking act are the. Pages in category banking in kenya the following 4 pages are in this category, out of 4 total. Among the recommendations are regulatory engagement to address the.
Agent banking operations as a competitive strategy of. Agency banking was introduced in kenya in 2010 according to opm 2011. This is despite the high rate of internet access recorded. In terms of branchless banking, kenya is probably best known for nonbankbased models. Kenya battle among financial players has intensified as commercial banks reach out to potential customers in the lowend market. A case of equity bank in kitui central district, kitui county, kenya. Financial institutions are constantly looking at new ways to reach the unbanked and serve existing customers better. Agency banking outlets extend banking services in kenya. No unauthorized loans, no unreported collections, head office and branch managers have realtime information on business transactions. Overview of the banking industry in kenya stephenson harwood llp to view this article you need a pdf viewer such as adobe reader. Agency banking in kenya requirement agents must also through the banks that sponsor them apply to run agency banking in kenya business. 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. This indeed shows the level of confidence that the board and the management of.
Investigation on importance of agency banking in provision of banking services 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. 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 analytical results of the study show that agency. A sample of three hundred and eightyone respondents 381 was used in the study from the target. Agency banking solution agency banking services jmr. At the moment, three banks have been placed under receivership with only one having recovered and back to operations.
In the same year, the national bank of kenya became the first fullyowned government bank. The lack of offerings means potential for product innovation 79% agents are contributing to client growth in contrast to tanzania 36% or uganda 33%. The stakeholders should be drawn from both the public and private sectors. Insider fraud may be particularly expensive due to agency problems. As a retail banking option, this model is flexible and can meet local needs. 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 banks are training agents who will engage in banking services on behalf of the banks. Can agency banking improve financial inclusion in south. Overview of the banking industry in kenya lexology. 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. In the year 1955, the ottoman bank and the commercial bank of africa were established. There are few african countries that have taken up agency banking.
Contribution of agency banking on financial performance. Boakenya sponsored annual general meeting and dinner dance of the law society of kenya. Central bank, their contracts and the banking policy. 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. The population of the study was 9 commercial banks offering agency banking in kenya. 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. Rise of agency banking in kenya mahindra comviva blog. Brazil and colombia identified as champions in agent banking. The implementation of agent banking services in kenya is a testament to this fact. Overall, the study was very important as it tells how financial inclusion in tanzania has been accelerated by use of agency banking practices. A sample of three hundred and eightyone respondents 381 was used in. The cbn shall have free, full, unfettered and timely access to the internal systems, documents, reports, records, staff and premises of.
Among the recommendations are regulatory engagement to address the barriers to. May opened kisii branch in western kenya and meru in the central region. Kenyan banks record growth in agency banking model. Participation in the group bank of africa network management meetings, in dakar, senegal. The kenyan banking sector is composed of 52 institutions, including 43 commercial banks, 1 mortgage finance company and 8 deposittaking microfinance institutions. The internet banking use is popular to both the male and the younger generations. The potential, power of agency banking the standard. The study selected 4 senior managers from each bank thus forming a sample size of 36 respondents who was used in this study. 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. The banking sector was liberalised in 1995 and exchange controls lifted. 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. Cooperative bank of kenya opened its doors in the year 1968. Investigation on importance of agency banking in provision.
Follow this stepbystep guide to invest in treasury bills through the central bank. Kcb targets agency banking to cement market position. Agency banking rollout in kenya was meant to address the low financial inclusion in kenya. In 1968 national bank of kenya took over the ottoman bank. 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.
In kenya, agency banking has been the fastest growing in terms of agents share. Kenyas financial transformation in the 21st century aws. Introduction of agency banking through an amendment of the banking act. Effect of agency banking services on customer satisfaction in ongata rongai under the kenya commercial bank, rongai branch. The challenges facing the implementation of agency banking. This led to the collapse of the east africa currency board eacb in mid 1960s. The history of banking in kenya precedes the countrys independence in 1963. Challenges of agent banking experiences in kenya request pdf. The nonbank led model of agent banking is a general agency arrangement where parties other. The agency banking model introduced in 2010 after the amendment. 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. It served the needs of growing farming communities and started operations in 1968. Spare a thought for the smallscale miner and dress maker. 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.
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. 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. The model aimed at improving financial inclusion in the country. 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. Mpesa, mshwari, agency banking and local language bank staff acting as examplars for. Agency banking is a model that is aimed at enhancing financial inclusion by reaching out to millions of people in need of financial services.