Kenyan banks recorded 30.9 percent improvement in agency banking attributed to the growth of transactions relating to payment of retirement and social benefits, transfer of funds, cash deposits and cash withdrawals.
According to the the latest data from the Central Bank of Kenya “Bank Supervision Annual Report 2016”, the value of banking transactions undertaken through agents increased from KShs 442.2 billion (USD 4.3 billion) to KShs. 734.2 billion (USD 7.1 billion).
Agency Banking data for banks – Value of Transactions in Kshs ‘M’
“The increase was attributed to the growth of transactions relating to payment of retirement and social benefits, transfer of funds, cash deposits and cash withdrawals.
These transactions experienced a growth of 1,240 percent (payment of retirement and social benefits), 110 percent (transfer of funds), 80 percent (cash deposits) and 32 percent (cash withdrawals) respectively, from the previous year,” reads the report.
Notably, account balances enquiries transactions reduced by 27.6 percent while payment of retirement and social benefits increased significantly by 882.1 percent signaling that the agency banking models are increasingly offering a variety of financial services offerings to customers. These services go beyond cash deposits and cash withdrawals which have consistently remained the top transactions conducted through agents.”
During the period, some of the agent transactions recorded a decline. These include: collection of debit and credit cards, collection of loan application forms, collection of debit and credit card application forms, account balance enquiries and collection of account opening application forms. These transactions experienced a decline of 100 percent, 81.1 percent, 33.3 percent, 27.6 percent and 18.3 percent, respectively.
The increase on transactions relating to payment of retirement and social benefits was as a result of the Government of Kenya’s move to appoint some banks as their payment agents for the National Safety Net Programme (Inua Jamii).
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This program runs three cash transfer programmes: cash transfer to orphans and vulnerable children; older persons cash transfer; and persons with severe disability cash transfer solution alternatives. During the year the Government, through the Inua Jamii programme, disbursed over KShs 14 billion to over 500,000 beneficiaries.
Further, the CBK report notes that by December 2016, 18 commercial banks and 5 microfinance banks (MFBs) had contracted 53,833 and 2,068 agents, respectively, spread across the country.
This was in comparison with the previous year, December 2015, where the number of agents contracted by commercial banks and MFBs were 40,592 and 1,154 respectively.
“The change implies a 33 percent (increase by 13,241 agents) and 79 percent (increase by 914 agents) growth of number of agents contracted by commercial banks and microfinance banks, respectively.”
“The overall increase in the number of agents is attributed to the growing confidence and acceptability of the agency banking model by the public and banks as an alternative channel of doing banking business.”