Benefits of Agent Banking in Kenya

  

Date Posted: 11/7/2012 10:06:36 PM

Posted By: wameyo99  Membership Level: Silver  Total Points: 345

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Nowadays you don’t have to visit a bank to do your banking services, thanks to a new form of banking known as agent banking. Agent banking is a form of branch less banking whereby a bank enters into a contract with an agent (mostly a retail outlet) to perform banking services on behalf of the bank. We have all seen these outlets in small and big towns across the country. So how have these bank agents benefited Kenyans as a whole?

Benefits of Agent Banking to Agents (retail outlets)

1. Increased income through commission

Bank agents are usually awarded commissions whenever they perform transactions on behalf of the bank. These commissions are mainly awarded when somebody deposits cash, withdraws cash, and when somebody opens a bank account through the agent. This is a nice way of generating extra income for a retail outlet

2. Increased customer traffic hence more business to the retail outlet

Bank agents usually conduct their normal businesses in addition to being bank agents. For instance a hardware shop that acts as a bank agent will continue conducting its main business (sale of hardware materials) in addition to being a bank agent. The increased traffic brought about by customers performing banking activities also translates to more people getting to know your business hence more sales.

Benefits of agent banking to the customer

Agent banking has literally brought banks to the villages and this has come with it many advantages to the customer. What are some of these advantages?

1. Ease of access

With bank agents almost everywhere, you no longer need to travel long distances to visit your bank. Your nearest retail shop could be operating a “KCB “Mtaani” or a “Co-op Kwa jirani” as they are locally known.

2. Flexible hours

Most banks close their doors by 4pm, but with bank agents, for as long as

the business premise remains open, you can do your transactions. This has proven to be very convenient especially for people who are busy during the day.

3. Cost-Effective

Transacting through bank agents has proven to be cost-effective especially to people who live in rural areas that are far away from banks.

Benefits to the Banks

Local banks have recorded an increase in their profits and agent banking is one of the main attributes to such huge profits. So, how does a bank benefit from its agents?

1. Cutting Costs

Banks are finding it cheaper to set up agents as opposed to opening a branch where they will incur extra costs of staffing, rent, electricity etc. With agent banking, the agent incurs almost all the costs.
Increased Product penetration
Agent banking has made it possible for bank products and services to penetrate areas that at first seemed impossible. With agent banking banks have reached even the smallest of villages.

2. Wide customer base

Bank agents are paid commissions when they sign up new customers and this has led to an increase in the number of customers for banks. Banks are finding it effective to increase their customer numbers in this manner as opposed to using sales people.

Agent banking is a recent phenomenon in Kenya and it is catching up pretty well. It is just a matter of time before we have agents in every corner of the country which will result in a larger population of the country enjoying banking services comfortably.

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