An Investigation of the Facfors Affecting the Adoption of Agency Banking in Kenya (A Case of Selected Agents in Nyeri Central District
Gichuki, Ephantus Mundia
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Agency banking is a recent model that hopes to enhance access to financial services by allowing smaIl scale operators to be engaged in banking services as satellite branched. This was largely as a result of pressure experienced by commercial banks to reduce operational costs while at the same time provides increasing returns to the shareholders. The purpose of the study was to assess the major factors affecting the adoption of agency banking in Nyeri Central District of Nyeri County. In particular, the specific objectives examined how relative advantage of the agency banking, complexity of the agency processes,personal factors and levels of public awareness influenced the adoption of the agency banking. Both primary and secondary data was compiled and linked to the specified objectives of the study. Stratified random sampling techniques were used to obtain a working sample of 40 agency units operating in the central Business District of Nyeri Town. Focus was the Equity Bank, KCB and Cooperative Banks which licenced agency operators under their banks. The study found that relative advantage of the agency banking transactions was a significant factor which affected the adoption of the agency banking. This was supported by the benefits of availability of services in various points around the Nyeri Town, convenience and accessibility by the customers. In addition, the agency services were within the reach (Affordable) to most people viewed it as relatively complex and hence it as relatively complex and hence sustained sensitization was necessary. In the areas of personal factors, the age factor of the agency users, social class and educational levels were found to have a significant influence on the rate adoption of the agency. In respect to the levels of public awareness, the study found that this aspect to a great extent influenced the rate at which the agency banking was being adopted in the market. The study concludes by pointing out that agencies relative advantage compared to the traditional banking system, personal factors and levels of public awareness to a great extent influenced the adoption rate of the agency banking. The recommendations include that the marketing staff of the commercial banks focuses their attention to population centres such as the schools, colleges, government institutions and attending other forums to popularize the service. Another recommendation is that the commercial banks should increase the commission payable to the agents in return for their added tasks of popularising and marketing the agency service and the banks should encourage large scale traders like wholesales like wholesalers and supermarkets to open a counter for agency banking. This would attract the attention of those engaged in frequent money transfer transactions such as the traders. Also more awareness campaigns and forums be prepared and funded to cater for those market segments not currently served by the agency services. Finally, bank should encourage big institutions such as colleges, hospitals, schools and market to open agency banking services.