The business model started about five years ago has taken banking services to the doorsteps of Kenyans and gained traction among citizens, with many of them opting to withdraw and deposit huge sums of money through the contracted agents.
As of September, new Central Bank of Kenya (CBK) data indicated Thursday, that transactions through the platform stood at over 9.8 billion U.S. dollars, with quarterly use hitting 1.1 billion dollars
The number of banks embracing the service has also grown steadily, rising to 17 out of 41 institutions in the East African nation.
The regulator acknowledged that many commercial banks are increasingly continuing to contract varied retail entities to offer basic banking services on their behalf.
The contracted entities include security companies, courier services, pharmacies, supermarkets and post offices that act as third party agents to provide cash-in, cash-out transactions and other services in compliance with the laid down guidelines.
“The 17 commercial banks have contracted 39,871 agents who facilitated over 193.4 million cumulative transactions valued at 9.8 billion dollars. At the end of June, commercial banks had 36,080 cumulative agents since the rollout who had facilitated 175.4 million transactions valued at 9.1 billion dollars,” said the CBK.
The regulator’s data showed that more users of the service are transacting huge sums of cash unlike the past as confidence grows.
During the quarter ending September, the number of banking transactions undertaken through agents decreased from 25.9 million in the quarter ended June to 19.5 million, a drop of 6.4 million transactions.
However, the value of banking transactions undertaken through the agents increased from 1.1 billion dollars to 1.2 billion dollars.
“Agency banking saves time. All the top banks, which experience long queues, have dozens of agents in suburbs in Nairobi, which makes it easier to access their services.
People are realising they transact at their doorstep than wait for over one hour in a queue,” said Ernest Manuyo, a business management lecturer in a private university in Nairobi.
Increased use of the service, according to commercial banks, has helped them mobilise cheap deposits from Kenyans.
According to the CBK, deposits remain the main source of funding for the Kenyan banking sector, accounting for 70.3 percent of total liabilities. The deposit base stood at 25.2 billion dollars in September.
The number of commercial banks deposit accounts increased from 31.6 million in June 2015 to 33.3 million in September, representing a growth of 1.7 million accounts, with some of them having been opened through agents.
While releasing their financial results recently, Equity, Kenya’s largest bank by customer base, said their banking agents network has grown significantly contributing to over 50 per cent of all their cash transactions.
“Our agency banking agents contribute 50.4 per cent of all our transactions, therefore exceeding transactions processed in branches and ATMs combined,” said chief executive James Mwangi. Enditem