Agency banking coop kwa jirani cooperative bank of kenya. 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. Agency banking in kenya requirement agents must also through the banks that sponsor them apply to run agency banking in kenya business. 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 subsaharan africa it is. Usage experiences in kenya by adrian d kamotho njenga lecturer of information systems, catholic university of eastern africa email. In kenya, agency banking has continued to take shape thanks to increased. A case of equity bank in kitui central district, kitui county, kenya. Opportunities in the banking sector, hamburg university press ebook as pdf to be downloaded.
Pdf the role of agency banking in promoting financial inclusion. Agent banking operations as a competitive strategy of. It is observed that the involvement of key stakeholders in implementation of agency banking cannot be understated opm, 2011. Waithanji 2012 found out that there was a link between agency banking and financial deepening. It has been used very well in latin america and asia. 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. Kenyan banks record growth in agency banking model branding voice. Countries kenya, tanzania and uganda are the only developing countries which make the payments of their. First of all there was national bank of india in kenya in 1896 after the establishment of the british in the region. Overall, the study was very important as it tells how financial inclusion in tanzania has been accelerated by use of agency banking practices. May 12, 2014 eye on kenya, kenya, east africa, agency banking, financial services. Banking industry development and social investment report 20.
Introduction of agency banking through an amendment of the banking act. Pdf the role of agency banking in promoting financial. Statement of the problem although most commercial banks with agency banking have tried to reach a wide range of clients, the. The results show that internet banking use in kenya is very low.
International journal of finance and accounting 4 12,116. Oct 31, 2017 agency banking outlets extend banking services in kenya. The relationship between challenge liquidity of agency. 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. Kenyan banks have embarked on an important reform to expand banking. Mauricio and maudrile 2008 did a study on a new agent model for agency banking in colombia. Investigation on importance of agency banking in provision. Investigation on importance of agency banking in provision of banking services in kenya. The challenges facing the implementation of agency banking. Investigation on importance of agency banking in provision of.
There are, however, more than 45,500 agents offering financial services. In kenya, for example, following the successful launch and rollout of safaricoms mpesa service which took place in the absence of any agency regulations for banks or nonbanks and the subsequent interest of the kenyan banking sector in branchless banking, the central bank of kenya cbk issued bank agency guidelines in 2010. Equity bank kenya limited, is a financial services provider headquartered in nairobi, kenya. In 2010 the entity introduced agency banking model which has proved a success and still regulated by central bank of kenya prudential guidelines. Brazil and colombia identified as champions in agent banking. As of december 31st, 2010, the country included 1,063 bank. Agency banking is a model that is aimed at enhancing financial inclusion by reaching out to millions of people in need of financial services. Developing countries are accepting agency banking as a means of banking the unbanked population. Analysis of the utilization of agency banking on the performance of. Internet banking with cba internet banking you can transform your home or office computer into a complete personal financial management centre. Agency banking outlets extend banking services 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. Challenges associated with adoption of agency banking and. This gives you the freedom to access your accounts and transact at your convenience.
The origin of commercial banking in kenya related to commercial connections in east africa, which existed towards the end of the 19th century. It is licensed as a commercial bank, by the central bank of kenya, the central bank and national banking regulator. Honourable njeru githae, minister for finance of the republic of kenya. Agency banking model is a function of certain commercial banks in kenya and as regulated by. The origins of commercial banking in kenya lie in these commercial connections. Jun 15, 2016 the banking sector in kenya is ever evolving.
Discussions with afi commenced in june 2009 with formal request for short term grant submitted in late june 2009. The stakeholders should participate in rolling out of mobile financial. 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 is a relatively new banking concept introduced in kenya in 2010 by the central. Nse, cytonn banking sector report share prices are as at 14th june, 2016 the banking sector has become cheaper on a pbv basis having dropped to 1. Kenya listed commercial banks cytonn q1 banking sector. 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 challenges facing the implementation of agency banking in. Low levels of financial inclusion in kenya32% of bankable population totally. 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. To deliver on this, we have developed a secure, fully transactional, internetbased banking platform.
The operations of banks in kenya are regulated by the banking act cap 488, companies act cap 486, and the central bank of kenya. In terms of branchless banking, kenya is probably best known for nonbankbased models, specifically those launched by mnos. With cba internet banking you can transform your home or office computer into a complete personal financial management centre. The research is financed by the institute of finance management abstract the objective of this paper was to assess the leverage provided by agency banking in promoting the financial inclusion in. What services are available at a coop kwa jirani agent. A well recognized exception to this general rule is the concept of agency. There are few african countries that have taken up agency banking. Investigation on factors facilitating accessibility of.
The sector is dominated by multinational banks such as standard chartered, barclays, etc. The analytical results of the study show that agency. It was followed by standard bank of south africa in 1910. 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 agency banking in kenya guidelines were enacted in 2010. According to safaricom 2011,financial inclusion is a big challenge in kenya,only 22. Banking agents and the bank itself coordination influences the growth of agency banking in kenya. To investigate the role of agency banking in facilitating accessibility of banking services through agency banking in kenya. Status of digital financial services in uganda ahead of agency banking and key. Guidelines on agent banking for the banks 1 guidelines on agent banking for the banks 1. At the moment, three banks have been placed under receivership with only one having recovered and back to operations. 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.
Banks must first apply to central bank of kenya to get approval to conduct agency banking business. Agency banking in latin america and brazil are the most developed hussain, 2014. As per the 2009 national financial access survey, 32% kenya. The agency banking model is a key part of the financial inclusion strategy for africa. Analysis of the utilization of agency banking on the performance of kenyan banks. However, because the concept of agency banking is now widespread banks practice to risk. 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. The bank must address the challenges that are posed by having agency banking while at the same time taking advantage of all the benefits of having this channel of banking. 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. Banks responding to the needs of the kenyan market for convenience and efficiency through alternative banking channels such as mobile, internet and agency banking. This relationship creates an agency banking business. This is despite the high rate of internet access recorded.
Pages in category banking in kenya the following 4 pages are in this category, out of 4 total. Agency banking as an expansion strategy for kenya commercial. The history of the agency banking can be traced bank to 1999 when brazil became. Creation and termination of agency it is a general principle of contract law that only the parties to the contract acquire rights and liabilities under it. The kenyan banking sector is composed of 52 institutions, including 43 commercial banks, 1 mortgage finance company and 8 deposittaking microfinance institutions. What services can you access on cba internet banking.
The challenges facing the implementation of agency banking in kenya a case study of kcb. 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. Kenyas financial transformation in the 21st century aws. Agency banking in kenya is the new way that banking in kenya is using to take banking. Agency banking took effect in kenya in may 2010 after the publication of prudential guidelines by the central bank of kenya. The banks are training agents who will engage in banking services on behalf of the banks. This gives you the freedom to access your accounts and. Support of five leading ugandan banks to roll out agency banking. Despite the numerous economic challenges that have been witnessed within the sector, the industry remains strong and vibrant. Banking sector multiples kenyas banking sector is trading at an average pbv of 1. 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. Select online platform eazzybiz eazzynet eazzychama self service portal eazzy remmittance eazzyfx.
These cards are prepaid and allow the record of funds to be increased. Central bank, their contracts and the banking policy. However, in kenya, how the utilization of agency banking has contributed to the performance of these banks is not documented. The agency banking network approval requires some conditions to be met together with completing the agency banking network application form. The study recommends further research on customer satisfaction and how it influences the growth of agency banking in kenya. Agency banking rollout in kenya was meant to address the low financial inclusion in kenya.
The banking sector was liberalised in 1995 and exchange controls lifted. The board of directors of each banking institution interested in agency banking must make policies guidelines and procedures to be followed to ensure that. Ebanking use a smart card with a prepaid amount of money embedded in it for use instead of cash at a pay phone, expressway road toll, or on college campuses at. Cash withdrawals from coop account sacco account fethalink cash deposits to coop account sacco account fethalink. Agency banking strategy and organizational performance in. The stakeholders should be drawn from both the public and private sectors. However, agency banking is a fairly new concept in africa with it being highly implemented in kenya and south africa agalla, 2014.
Upon successful application, vetting and approval, these agents are authorized to offer selected products and services on behalf of the bank. In neighbouring countries such as tanzania, kenya and rwanda agency banking has already been successfully introduced, proving thousands of lowlevel income households access to financial services. The banking sectorsaggregate balance sheet grew by 3. The internet banking use is popular to both the male and the younger generations. Overview of the banking industry in kenya lexology. Agency banking may eventually lead to financial inclusion in the countries where it has been adopted. Agency banking has enabled bank customers to access the basic banking services, for example, cash deposit, cash withdrawal and bank balance inquiry conveniently or what would be termed as within the comfort of their neighborhood. Isolation and a lack of infrastructure compound the issues facing those living in remote rural areas when it comes to accessing financial services.
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