| dc.description.abstract | Agency banking is delivery of financial services outside convectional bank branches; through
non-bank retail outlets, that rely on such technology as point of sale devices or mobile
phones for real time transaction process. Having been implemented with varying degrees of
success by a number of developing countries, particularly in Latin and Brazil, it has also been
employed by fmancial institutions in Kenya to provide 'real-rime' service to existing
customers so as to enhance profitability through increased customer base and efficiency in
service providence. However some of the banking institutions which have employed this
concept continue to witness long queues in the banking halls, high level of dormancy of
accounts while the bank's services have been brought right at the customers' door step. It is
yet to be known the level the impact of agency banking on the bank's performance. The
purpose of this study was therefore to determine the effect of agency banking model on
performance of commercial banks in Western region. Specifically the study sought to:
Establish the level of agency banking by Equity bank in Western Kenya branches; determine
the relationship between agency banking cost and profitability of Equity Bank Limited;
determine the relationship between agency banking risk and the customer base of Equity
Bank Limited and determine the relationship between agency banking policy on the bank and
its performance. The study was anchored on conceptualized framework. A descriptive survey
design guided the study. A Census survey was employed. The study used both primary and
secondary data. Validity and reliability of these instruments was checked using expert review
and Cronbach's Alpha respectively (alpha =0.789). Data was analyzed using regression
analysis. The study revealed that: the level of agency banking by equity bank agents was
established at 74.07%; agency banking cost revealed a positive significant association on the
profitability of Equity Bank Limited (b=0.710, r=0.183, t=6.72, p<0.05); the level of risk
involved in agency banking had negative and significant effect on the customer base of the .
bank(b=-0.407,r=-0.267,t-0.950, p<0.05) and the relationship between agency banking policy
and bank performance indicated a moderate positive association(b=0.490,r=0.660,t=1.060,
p<0.05). It is imperative for the bank branches to participate in the agent recruitment process
so that the banks can leverage existing relationships that branches have established. There is
need for the banks to train their agents in making correct transactions and enforcement of
anti-money laundering standards. The agents should secure operating systems capable of
carrying out real time transactions, generating an audit trail, and protecting data
confidentiality and integrity to mitigate on the agency banking risks. The study is expected to
be of help to commercial bank policy makers in identifying the key challenges involved in
agent banking operations and coming up with strategies that will improve performance. | en_US |
