Challenges facing agency banking: A case study of Kasarani region

Abstract

Agency banking roll-out in Kenya was meant to address the low financial inclusion in Kenya. As per 2009 National financial access survey, 32% Kenya's bankable population is still totally out of financial orbit. Difficulties in accessing financial services main drivers are; long distance to banking channels and relative high co t of accessing financial service. In a bid to bridge the financial access divide the Government of Kenya through Central Bank amended the finance act 2009 to facilitate the u e of third parties by bank to provide baking service . Agency banking has proved to be a cost saving network as compared to physical brick and mortal banking branches . Keen to the agency banking advantage, Kenyan financial Institutions have since 20I0 have aggresively made entry into this segment .However the challenges the Kenyan banks face in the implementation and running of the agent bank is not yet known. The general objective of this research was to establish the challenges faced by the agency banking operators in Kasarani region Nairobi. The specific objective were to find out whether security is a challenge to Agency banking in the region, to a se regulations as a challenge to the agency bank operators, to find out whether human capital resources is a challenge to agency banking and finally discern the level at which infrastructural support by various respective bank is a challenge to the agency banking in the region. The study adopted a descriptive research design. The study targeted the bank agent providing bank services at the five environ in Kasarani Region. The population of the study fell under the agent outlets of the main three banks cooperative bank, Equity bank and Commercial bank distributed in equal proportion. Both qualitative and quantitative data was collected by use of a questionnaire with both open ended and close ended questions. Data was analyzed and presented using descriptive statistical tool including frequencies, percentages, mean and standard deviation. In addition SPSS ( Statistical Package for Social Sciences) model was al 0 used for data analysis. The general results were presented using tabulations, charts and graphs. Content analysis was used to analyze qualitative data obtained from the open ended questions in the questionnaire and the results analyzed in a continuous prose form. The study found that infrastructural support was a challenge to the agency bank operators and local switches and servers are in sincere need to allow reducing operation failure as a result of infrastructural failure. The study also realized that a high percentage of the agent operators' claim that human resource capital is a challenge to the banking.