Agency banking model

Agency banking model[1] is a function of certain Commercial banks in kenya and as regulated by Central Bank of Kenya legislation that allows them to contract third party retail networks as Banking agent. Upon successful application, vetting and approval,[2] these Agents are authorized to offer selected products and services on behalf of the Bank. This relationship creates an Agency Banking business model.

Definition

A Banking agent in Kenya therefore is a commercial entity that has been contracted by a commercial Bank and approved by the Central Bank of Kenya to provide specific services on behalf of the bank. This entity shall be equipped with the skills necessary to provide basic banking services according to standards set by the Bank.

This will provide the opportunity to access financial products and services at a location nearest to the customer, thus breaking down certain barriers to financial inclusion such as cost and accessibility.

Agency banking approved activities

Activities that the agency can engage are determined by the contracting bank after assessment[2] of the applying entity. Some of these include:[3]

  • Cash withdrawal
  • Bills payment
  • Cash deposits
  • Funds transfer
  • Balance enquiry
  • Document collection for debit and credit cards, loan applications and account opening forms
  • Collection of bank correspondence and mail
  • Mobile banking services

Agency banking transactions are denominated in Kenya shillings.

Activities prohibited for agency banking in Kenya

Some activities are prohibited and are listed below. When an agency continues to perform prohibited activities, their contract may be terminated.

  • Perform and carry out transactions when the networks and communication failure is experienced. The transaction must have acknowledgement or receipt.
  • Charge customers any fees
  • Carrying out agency banking business when agent is no longer a going concern
  • Offer its own banking services apart from the sponsoring bank
  • Anti-money laundering services
  • Foreign exchange transactions
  • En-cashing and depositing of cheques
  • Provision of cash advances and loans
  • Subcontracting to any business to run its agency banking

Major players on Agency Banking in Kenya

Several Kenyan commercial Banks have recorded an increased[4] uptake of Agency banking model and as of 2016 majority of the deposits and withdrawal transactions were originating from Agents locations. Banks like Equity Bank Kenya Limited[5] have in the recent past recorded an average of 20000 recruited agents. KCB Bank Kenya Limited has an average of 10000[6] Mtaani Agents who the bank depends to reach the marginalised. Cooperative Bank of Kenya also has established a successful Co-op Kwa Jirani Agents [7]

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References
  1. "Agency Banking in KenyaBanking in Kenya". Bankinginkenya.com. 2011-07-05. Retrieved 2017-02-23.
  2. "How to become an Equity Agent - Equity Bank Ltd Kenya". Ke.equitybankgroup.com. Retrieved 2017-02-23.
  3. "Co-operative Bank of Kenya • Agency Banking services". Co-opbank.co.ke. Archived from the original on 2017-02-19. Retrieved 2017-02-23.
  4. "CBK: Kenyan banks record growth in agency banking model - Branding Voice". Standardmedia.co.ke. Retrieved 2017-02-23.
  5. "Equity Bank 3.0: Agency Banking & Equitel". Bankelele. 2015-11-23. Retrieved 2017-02-23.
  6. "Agency banking brings services closer to Kenyans | KCB Blog". Blog.kcbbankgroup.com. Archived from the original on 2017-02-19. Retrieved 2017-02-23.
  7. Martin Gicheru (2011-04-13). "Co-op Kwa Jirani, a new Agency banking by Co-op bank". Techweez.com. Retrieved 2017-02-23.
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