project report

THE ROLE OF AGENCY BANKING ON THE GROWTH OF BANKING INSTITUTIONS IN KENYA

(A CASE STUDY OF KENYAN COMMERCIAL BANKS)

Do a research proposal guided by the following questions;

1. What does Agency Banking entail?

2. What would you say are some of the reasons that could lead an organization to adapt Agency banking model?

3. What are the Proportion of various services that are undertaken via agency banking?

4. Is there a monitoring system or plan put in place for Agency Banking to ensure it is in tandem with the corporate plan?

5. In relation to the market and competition, where would you rate the level of agency for your bank?

6. To what extent does central bank regulation affect the financial performance of commercial banks in Kenya

Statement of the Problem

The Kenyan business environment has changed and it has been characterized by stiff competition among the players and the banking industry is no exception. Competition amongst the commercial banks as well as entry of mobile phone operators in the money transfer business has pushed banks towards becoming more innovative .The government of Kenya through the central Bank of Kenya embarked on Knowledge Exchange for Agent Banking models that could work for Kenya. It was in pursuant of vision 2030 that the financial services sector was identified as key in mobilizing funds to implement the visions 2030 flagship projects. According to 2009 national financial access survey, 32%5of Kenya’s bankable populations are totally excluded from the financial services orbit (Njuguna, 2010).

To keep up with global trends on use of agent banking to enhance financial inclusion, the Finance Act (2010) amended the Banking Act to facilitate use of third parties by banks to provide banking services. The Central Bank of Kenya amended the Banking Regulations and issued Agent Banking Regulations (2010) to allow commercial banks contract third party retail agents to provide financial services on their behalf. This decision was also driven by Kenya’s blue print for economic developments, Vision 2030, to extend access to financial services for all adult Kenyans by the year 2030 (CBK, 2010)

A number of studies have been conducted on various aspects in the banking industry. Emoru (2012) looked at factors influencing growth of agency banking in the banking industry: case of Equity bank limited Mombasa County. The study found that market share and increased competition had the highest influence on growth of Equity bank agents. Wabwoba (2012) looked at Challenges facing equity agency banking; a case of Pokot County, Kenya. The study found out that mobile phone network failures posted a major challenge to agency banking in the region. Studies have also been carried out in developing countries, the findings may not be applicable in Kenya owing to certain environmental differences (CBK, 2010).

Objective of the Study

To determine the role of agency banking on financial on the growth of commercial banks in Kenya.

Business Catalyst

Nº del proyecto: #14216507

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