The study used secondary data and was collected from previously collected data, general. Analysis of the utilization of agency banking on the performance of kenyan banks. With the borders of the modern state at the crossroads of the bantu, nilosaharan and afroasiatic ethnolinguistic areas of africa, kenya is a truly multi. However, in kenya, how the utilization of agency banking has contributed to the performance of these banks is not documented. Investigation on importance of agency banking in provision of. It is known that human history in kenya dates back millions of years, because it is there that some of the earliest fossilized remains of hominids have been discovered. The history of internet banking 1983 2012 subscribe now get the financial brand newsletter for free sign up now. It has been used very well in latin america and asia. Agency banking outlets extend banking services 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. The study sought to establish the effect of agency banking on financial performance of commercial banks in kenya. Focus on agency banking in kenya metric comparison of bank vs. The bank is now anchored in the constitution under article 231.
The main objective of the study was to establish the challenges facing the implementation of agency banking in kenya. The effect of agency banking on the financial performance. Discussions with afi commenced in june 2009 with formal request for short term grant submitted in late june 2009. Oct 31, 2017 agency banking outlets extend banking services in kenya. The internet banking use is popular to both the male and the younger generations. The goals of agency banking as a strategy is to increase revenue from additional. Agency banking is different from a bank cashier or teller in that the owner conducts the transactions such as cash deposit, cash withdrawal, electronic fund transfers, and payment of bills, 1 family bank limited, kenya. Central bank is the lender of last resort in kenya and is the banker to all other banks. In kenya agency banking started from mobile financial services such as kcb mtaani, equity agents and pesa pap irungu, 2010. A part of eastern africa, the territory of what is now kenya has seen human habitation since the beginning of the lower paleolithic. The study targeted banks that offer agency banking services in kenya. The number of banks offering agency banking were four. A company secretary can work as a compliance officer in a banking and financial institution and play an important role in ensuring compliance. The challenges facing the implementation of agency banking in kenya a case study of kcb.
The origin of commercial banking in kenya related to commercial connections in east africa, which existed towards the end of the 19th century. Spratt 20 for example advocates a study of the contextspecific determinants of banking crises in order to understand how financial regulation can prevent them, while not stifling economic activity in a way that damages growth. Doc evolution of banking in kenya albert arap maiyo. Brief overview of the kenyan banking sector remarks by prof njuguna ndungu, governor of the central bank of kenya, at the launch of the firstrand bank representative office in kenya, nairobi, 2 may 2012.
In 1995 the exchange controls were lifted after the liberalization of the banking in kenya. Impact of ebanking on traditional banking services shilpan vyas school of computer science and information technology, singhania university, pacheri bari, jhunjhunu 333515 rajasthan, india. Among the bestknown finds are those by anthropologist richard leakey and others in the koobi. 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. The population for this study was 16 commercial banks that have embraced agency banking. This research sought to examine constraints hindering operation of financial services on banking agency in kenya, a case of national bank of kenya ltd 2. Central bank of kenya is tasked with formulating and implementation of monetary and fiscal policies.
The objective of the study was to assess the utilization of agency banking on the performance of kenyan banks. A history of banking in kenya a documentary by the kenya bankers association dailynation. The bank undertakes the most rapid expansion of service outlets by opening an additional 22 branches within one year to close 2009 with 74. Unlike other commercial banks in kenya that are licensed and regulated by the central bank of kenya, postbank is regulated by the kenya post office savings bank act cap 493b. Agency banking co op kwa jirani this is a convenient and simple banking model to suit your lifestyle as well as offer you convenience.
Overview of the banking industry in kenya stephenson harwood llp to view this article you need a pdf viewer such as adobe reader. The use of information technology in banking operations is called electronic banking. Agency banking rollout in kenya was meant to address the low financial inclusion in kenya. Agency banking as an expansion strategy for kenya commercial. 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. First of all there was national bank of india in kenya in 1896 after the establishment of the british in the region. Among the 31 locally owned banks, the government of kenya has a shareholding in three of them, 27 of them are commercial banks and one is a mortgage finance institution, known as housing finance.
Demographics both models have similar metrics for agent gender, dedication, and exclusivity, but bank agents are more educated than mno agents. How equity bank changed face of kenyas banking sector. The rise of agency banking in kenya published on july 1, 2015 july 1, 2015 15 likes 4 comments. 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. In recent years, agency banking has been adopted and implemented with varying degrees of success by a number of developing countries, particularly in latin america. There are few african countries that have taken up agency banking. The population of the study was 9 commercial banks offering agency banking in kenya. Effect of technology adoption on agency banking among. The difference between bank products, services and channels is often misunderstood. The sector is dominated by multinational banks such as standard chartered, barclays, etc.
How equity bank changed face of kenya s banking sector. The results show that internet banking use in kenya is very low. In addition, customers may not be clear on the information they. 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. This comprises about 20 million kenyans who can maintain at. National bank was incorporated on 19th june 1968 and officially opened on thursday november 14th 1968. A history of banking in kenya a documentary by the kenya. A well recognized exception to this general rule is the concept of agency. Abstract internet banking is changing the banking industry, having the.
The challenges facing the implementation of agency banking. This relationship creates an agency banking business model. Effect of agency banking on financial inclusion in kenya. The objective for which it was formed was to help kenyans get access to credit and control their economy after independence. Assess the nature of association between selected agency banking dimensions and growth of mses in kenya iii. Kenya post office savings bank, often referred to as postbank, is a savings bank in kenya. A consumer guide to banking in kenya cost of credit. Find out the extent to which the selected agency banking dimensions inform policy shift in growth of mses in kenya. To establish how technological risks affects the implementation of agency banking. Empowering a continent by creating better livelihoods. Jul 01, 2015 the rise of agency banking in kenya published on july 1, 2015 july 1, 2015 15 likes 4 comments. The challenges facing the implementation of agency banking in.
Investigation on factors facilitating accessibility o f banking services through agency banking in kenya. The population of the study was forty branch managers of selected branches in nairobi. The bank is recognized as best bank in kenya in the banker magazine awards of the financial times of london. Sep 19, 2016 kenyan banks recorded significant improvement in agency banking. Agency banking is a model that is aimed at enhancing financial inclusion by reaching out to millions of people in need of financial services. What services are available at a coop kwa jirani agent. Discussions with afi commenced in june 2009 with formal request for. As per the 2009 national financial access survey, 32% kenya. The bantu expansion from a west african centre of dispersal reached the area by the 1st millennium ad. Pdf the challenges facing the implementation of agency. This relationship creates an agency banking business.
International journal of finance and accounting 4 12,116. Kenyan banks recorded significant improvement in agency banking. Banks must first apply to central bank of kenya cbk to get approval to conduct agency banking business. Bank history the central bank of kenya was established by an act of parliament of march 24, 1966 and opened its doors to the public on september 14, 1966. The colonial history of kenya dates from the berlin conference of 1885 when the european powers first partitioned east africa into spheres of influence. The study recommends further research on customer satisfaction and how it influences the growth of agency banking in kenya. Descriptive research design was used in this study.
In terms of branchless banking, kenya is probably best known for nonbankbased models, specifically those launched by mnos. Challenges associated with adoption of agency banking and. It was followed by standard bank of south africa in 1910. Investigation on factors facilitating accessibility of. A recently conducted survey revealed that only 30% of the bankable population in kenya can access financial services. Examine whether there are significant differences in growth among banking agency mses in kenya iv. Banking agents and the bank itself coordination influences the growth of agency banking in kenya. The financial access survey of 2009 shows that 32% of kenyas bankable population remains totally out. Overview of the banking industry in kenya lexology. The agency banking in kenya guidelines were enacted in 2010. In a report released by central bank of kenya, the value of banking.
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. In addition to the objective of financial inclusion, banks has used the agency banking to reduce their operational costs. Investigation on importance of agency banking in provision of banking services in kenya. This is despite the high rate of internet access recorded. Kenyan banks record growth in agency banking model. Ovia, 2001 argue that electronic banking is a product of ecommerce in the field of banking and financial services. Regulation of banking and payment agents in kenya 22. 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. Investigation on importance of agency banking in provision. Agalla 2014 sought to establish challenges facing implementation of agency banking at kenya commercial bank, with an objective of establishing whether risks associated with agency banking, policies and procedures governing agency banking. By jeffry pilcher, ceopresident and founder of the financial brand. Other articles where history of kenya is discussed.
The kenyan banking sector is composed of 52 institutions, including 43 commercial banks, 1 mortgage finance company and 8 deposittaking microfinance institutions. There are, however, more than 45,500 agents offering financial services. Brazil and colombia identified as champions in agent banking. Kenya bankers association and the ministry of finance. The central bank of kenya continues to support innovations that will broaden the financial inclusion of the majority of the kenyans. 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 history of land in kenya nairobi own land in kenya.
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. Usage experiences in kenya by adrian d kamotho njenga lecturer of information systems, catholic university of eastern africa email. Agency banking coop kwa jirani cooperative bank of 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. The study selected 4 senior managers from each bank thus forming a sample size of 36 respondents who was used in this study.
Honourable njeru githae, minister for finance of the republic of kenya. Upon successful application, vetting and approval, these agents are authorized to offer selected products and services on behalf of the bank. Commercial banks in kenya have adopted agency banking as part of financial inclusion initiatives aimed at reaching the poor and unbanked population, which is thought to alleviate poverty levels. Mauricio and maudrile 2008 did a study on a new agent model for agency banking in colombia. The banks are training agents who will engage in banking services on behalf of the banks.
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