The lack of offerings means potential for product innovation 79% agents are contributing to client growth in contrast to tanzania 36% or uganda 33%. 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. Investigation on factors facilitating accessibility of. National bank offers a wide range of products to cater for your banking needs. The challenges facing the implementation of agency banking in. Agent banking guidelines issued in april 2010 to take effect from 1st may 2010. Kenyas first fully locally owned commercial bank was the cooperative bank of kenya, which was initially a cooperative society. Investigation on importance of agency banking in provision. The population of the study was 9 commercial banks offering agency banking in 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. Can agency banking improve financial inclusion in south. Kenyan banks recorded significant improvement in agency banking introduced six years ago. A case of equity bank in kitui central district, kitui county, kenya. If you cant read this pdf, you can view its text here. A 2007 survey of barriers to banking, using data from 62 countries, indicates that minimum balances required by kenyan banks are quite high. Agency banking solution agency banking services jmr. Job omagwa department of accounting and finance, school of business, kenyatta university, kenya 2017. A sample of three hundred and eightyone respondents 381 was used in the study from the target. A survey of all the 42 licensed commercial banks in kenya was done.
Branchless banking which involves the use of agency banking and electronic banking. Some of these laws include but not limited to the appropriation act, banking act. Agency banking took effect in kenya in may 2010 after the publication of prudential guidelines by the central bank of kenya. In terms of branchless banking, kenya is probably best known for nonbankbased models, specifically those launched by mnos. The average minimum balance in kenya equals to 44 percent of gross domestic product gdp per capita. The proposed sacco societies regulatory bill 2004 is still to be debated in parliament. The rural financial sector is governed by the banking act, building society act and the post bank act. Look for banking services in kenya and mortgage lenders in kenya, loans providers in kenya from the top nairobi banking instititutes. The banking act of kenya this law provides basic principles and framework to form, settle, govern and regulate banking institutions. Agency banking has been practiced in a number of countries such as brazil, columba, pakistan, south africa and indonesia. Internationally, the concepts of agency banking and branchless banking appear to be closely aligned or even synonymous. Analysis of the utilization of agency banking on the performance of. However, in kenya, how the utilization of agency banking has contributed to the performance of these banks is not documented.
Follow this stepbystep guide to invest in treasury bills through the central 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. Agency banking outlets extend banking services in kenya. The challenges facing the implementation of agency banking in kenya a case study of kcb.
Growth in the banking sector has been underpinned by alternative banking offerings 20 12 20 over the last few years, the banking sector in kenya has continued to grow in assets, deposits, profitability and products offering the banking sectorsaggregate balance sheet grew by 3. Agency banking and financial performance of commercial banks in kenya 99 as correspondence banking can be traced to brazil in 1999 exponentially growing from 1,600 agents in 2000 to 170,000 agents in 2010 mckay, 2011. Case study enabling mobile money transfer the central bank. It exercises its approval right in its sole discretion without any clear standards. Job omagwa department of accounting and finance, school of.
Section 6 draws together the ways in which agency banking can address financial inclusion and section 7 makes some recommendations. As per the 2009 national financial access survey, 32% kenya. Banque indosuez kenyan branch credit agricoleindosuez calyon. Incorporated under kenyan law, integrated as a subsidiary into boa network in2004. It served the needs of growing farming communities and started operations in 1968. 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. 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. It has been used very well in latin america and asia. Kenya banks banking directory kenya list of banks in. Online banking in kenya, open a bank account in kenya or apply for a kenyan loan. The main sectors of the kenyan economy are agriculture, manufacturing, tourism and financial services. Focus on agency banking in kenya metric comparison of bank vs.
Central bank of kenya is the regulating authority with 45 banking institutions whereby. There has been increased competition from local banks as well as international banks, some of which are new players in the country. Investigation on importance of agency banking in provision of. Agency banking was introduced in kenya in 2010 according to opm 2011. Barclays bank u ltd nyamira branch barclays has operated in kenya for over 90 years. In addition to the eurobond, which in our view cannot be completed during this fiscal year given the approximately 4months leadtime for the last eurobond, kenya is in the process of. Effect of agency banking services on customer satisfaction in ongata rongai under the kenya commercial bank, rongai branch. Demographics both models have similar metrics for agent gender, dedication, and exclusivity, but bank agents. Mauricio and maudrile 2008 did a study on a new agent model for agency banking in colombia. As time progressed, the changing landscape of banking began to note the entrance of fully indigenous banks. Kenya first issued eurobonds in june 2014 currently trading at yields of 7. Oct 31, 2017 agency banking outlets extend banking services in kenya. Kenya listed commercial banks cytonn q1 banking sector. It was followed by standard bank of south africa in 1910.
First of all there was national bank of india in kenya in 1896 after the establishment of the british in the region. Equity bank, kcb bank, access bank, nmb bank, dcb bank, tpb b ank, advanc bank, amana ban k, efatha bank and finca. Bank of africa kenya annual report 2012 30 years of growth and expansion 2004bank of africa kenya created in1981. According to safaricom 2011,financial inclusion is a big challenge in kenya,only 22. In united states, agency banking model is used by foreign banks to. The relationship between agency banking and financial. Agency banking solution agency banking services jmr infotech. The diversity of the banking system, for example, will influence the pattern of lending by sectors. Kenya has not developed a comprehensive rural financial services strategy. This is despite the high rate of internet access recorded. Nyamira banks banks nyamira banks nyamira kenya banking. Usage experiences in kenya by adrian d kamotho njenga lecturer of information systems, catholic university of eastern africa email.
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 operations of banks in kenya are regulated by the banking act cap 488, companies act cap 486, and the central bank of kenya. April held cool kids quarterly emptying day, an event for children account holders. Pdf the effect of branchless banking strategy on the financial. The research was a case study and involved use of primary data. Efficiency and convenience in operation in agency banking have increased the banks customers transactions. Kenya takes a different approach, requiring agents to be forprofit actors and regulating banking agents no. The kenyan mpesa mobile telephone banking service was first conceived by safaricom. School of business and economic, mount kenya university, main campus general kago rd p. Under the personal banking segment you will find all the solutions for your. The central bank of kenya has consequently put chase bank of kenya not to be confused with the global jp morgan chase bank in receivership on 7th april 2016, as a result of what appears to be a very massive uncontrolled and unethical loan disbursement to staff and directors of chase bank, leading to the bank being in serious financial and economic risk. The low access figures are likely due in large part to the fact that banking is expensive in kenya. This case study investigates the potential tradeoff between regulation and stability in kenya, a small open economy which is highly vulnerable to domestic and external shocks, but with a lightly regulated financial system and a fairly open. T he bot 2014 report identifies 3,431agency b anks countrywide with crdb bank.
Transaction needs saving needs investing needs borrowing needs. Find contact details of kenyan banks by area or branch. Pdf the role of agency banking in promoting financial. May opened kisii branch in western kenya and meru in the central region. The banks are training agents who will engage in banking services on behalf of the banks. The banking sector in kenya comprises 43 registered commercial banks that are licensed by the central bank of kenya. Banking industry in kenya the companies act, the central bank of kenya cbk act and the banking act are the. Notes on regulation of branchless banking in kenya currently have the necessary tools including specific regulations to supervise the payment system. Financial strength coupled with extensive local and international resources have positioned barclays bank of kenya as a foremost provider of financial services. The model aimed at improving financial inclusion in the country. 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. Bank of africa was established at a time when the west african banking sector experienced serious difficulties. 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 aka branchless banking is quickly emerging as a way to offer services to those without banking access. Mwega which have spread to neighbouring countries, foreign banks and development this case study investigates the potential tradeoffs between regulations and stability of kenyas financial sector and their implications for inclusive growth. Agency banking has low infrastructural cost and hence reduction in cost. For example, cgap discussions around banking correspondents in brazil and india, mpesa agents in kenya or smart money branchless banking networks in philippines appear to view the concepts interchangeably. The origin of commercial banking in kenya related to commercial connections in east africa, which existed towards the end of the 19th century. The main objective of the study will be to identify. In united states, agency banking model is used by foreign banks to enter the market. The challenges facing the implementation of agency banking. Download the little data book on financial inclusion. Financial institutions are constantly looking at new ways to reach the unbanked and serve existing customers better. The banking directory for kenya, search for banks in kenya. 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. Annual report 2012 bank of africa kenya bank of africa group celebrates its 30th anniversary this year we are celebrating our groups 30th anniversary.
Kenyan banks record growth in agency banking model. We exploit the fact that equitys branching policy favored minorityspeaking districts more than those of other banks, and we use instrumental variables iv regressions to identify the impact of equity banks branch penetration on households access to banking services. Potential welfare gains were identified and these gains were later explored in a household survey. Boakenya sponsored annual general meeting and dinner dance of the law society of kenya. Agency banking took effect in kenya in may 2010 after the publication of. The internet banking use is popular to both the male and the younger generations. Agency banking rollout in kenya was meant to address the low financial inclusion in kenya.
International conference on rural finance research. The stakeholders should participate in rolling out of mobile financial. Balancing inclusive growth with financial stability francis m. Effect of agency banking services on customer satisfaction. Agency banking and financial performance of commercial banks in embu county, kenya irene njoki mbugua master of business administration finance option, kenyatta university, kenya dr. Kenya listed commercial banks cytonn q1 banking sector report. Agent banking operations as a competitive strategy of. Pages in category banking in kenya the following 4 pages are in this category, out of 4 total.
A sample of three hundred and eightyone respondents 381 was used in. Participation in the group bank of africa network management meetings, in dakar, senegal. As a retail banking option, this model is flexible and can meet local needs. The stakeholders should be drawn from both the public and private sectors. Part ii refers to the formation of banks, giving guidelines for the settling of bank charters, including principles for sound bank management. There are, however, more than 45,500 agents offering financial services. Agency banking and branchless banking internationally, the concepts of agency banking and branchless banking appear to be closely aligned or. Financial regulation in kenya overseas development institute. The study recommends that national bank of kenya in kiambu county should increase the number of agents in estates and in the rural areas. It is observed that the involvement of key stakeholders in implementation of agency banking cannot be understated opm, 2011. The reports provide updates on the performance and developments in the banking sector over the period covered by the reports. Investigation on importance of agency banking in provision of banking services in kenya.
However, agency banking is a fairly new concept in africa with it being highly implemented in kenya and south africa agalla, 2014. 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. Oct 07, 2015 overview of the banking industry in kenya stephenson harwood llp to view this article you need a pdf viewer such as adobe reader. The bank supervision and banking sector reports are released on an annual and quarterly basis by the central bank of kenya. Overview of the banking industry in kenya lexology. The results show that internet banking use in kenya is very low. Overview of the banking industry in kenya stephenson harwood llp to view this article you need a pdf viewer such as adobe reader. Pdf competitive strategies adopted by bank of india kenya. The study selected 4 senior managers from each bank thus forming a sample size of 36 respondents who was used in this study. While agency banking is now offering savings services, not a great enough percentage of agents are involved to showup here. There are various banking laws in kenya that govern and regulate the way banks are formed, operate and are managed in the country.
1112 1152 1221 1430 1072 353 934 536 1212 747 283 1407 84 1233 772 346 1083 765 1326 348 1410 70 595 116 1466 850 1059 10 1257 238 393 1434 752 1258 514 1120 992 845 448 311 1202 1044 1415