Agency banking takes root in Kenya

Agency banking is fast eclipsing conventional banking to become the second most preferred form of transaction in Kenya.

The 2017 agency banking report by the Central Bank indicates that Kenyans transacted a total of one trillion shillings in 2017 up from 734 billion shillings in 2016.

Three banks namely, Equity, KCB and Co-op bank accounted for 90 percent of all agency transactions last year.

Since the approval of agency banking by central bank of Kenya in 2010, the model has grown to 61 thousand surpassing the total number of commercial bank branches.

The model that allows a third party to offer services like, withdrawals, deposits and bill payments has become popular especially in the rural areas where bank outlets are not present.

The report by Central Bank of Kenya says the delivery of financial services through agency banking rose last year by 14 per cent for commercial banks and six per cent for microfinance banks.

The country’s top three banks account for 90 percent of all transactions carried using this medium. Of the 61,290 agents in the country, Equity bank has 28,663 agencies while KCB and Co-Op banks have 14,466 and 11,207 agencies respectively.

The report says the value of banking transactions made through bank agents rose 46.4 per cent to Sh1 trillion in 2017.

The number of banking transactions handled by bank agents grew 34.1 per cent from 105 million transactions in 2016 to 140 million as of December 2017.

The growth was due to increased transactions in payment of bills, cash deposits, mini statements, and cash withdrawals.

Cash deposits took the lion share of transactions in 2017with about 51.5 percent followed by cash withdrawals, and account balance enquiries at 35 percent and 10.2 per cent.

On the other hand, 94 per cent of the microfinance banks agents are contracted by the Kenya Women Finance MFB.


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