FACTORS INFLUENCING THE UPTAKE OF AGENCY BANKING SERVICES BY CUSTOMERS IN COMMERCIAL BANK IN KENYA: A CASE OF KENYA COMMERCAL BANK

Abstract

The business environment has changed in Kenya as in other parts of the world and it has been characterized by stiff competition among the players and the banking industry. The general objective of this study was to establish the factors influencing the uptake of agency banking services by customers in commercial banks in Kenya. The study also sought to establish how security, liquidity availability, customers and awareness influence the uptake of agency banking by customers in commercial bank in Kenya. This study used a descriptive research design. The target population of this study was 4972 customers from Kenya Commercial Bank branches in the Nairobi CBD. The target population of this study was therefore 4972 respondents. The study used stratified sampling technique to select 10% of the target population. The sample size of this study was 497 respondents. The study used primary data which was collected by use of questionnaires; the questionnaires included structured and unstructured questions. The questionnaire was administered by use of a drop off and pick up later method to the sampled respondents. Statistical Package for Social Sciences (SPPS), data analysis software, was used to analyze the quantitative data. Further, quantitative data was analyzed by use of descriptive and inferential statistics. Descriptive statistics such as mean, frequencies, standard deviation and percentages were used to profile sample characteristics and major patterns emerging from the data. The study also used probit analysis to establish the relationship between the dependent variable and independent variables. Quantitative data was presented in tables and figures. The study also used content analysis to analyze qualitative data obtained from open ended questions. The data was then presented in a prose form. The study found out that security and liquidity availability influence the uptake of agency banking by customers in commercial bank in Kenya. In addition, most customers had experienced a transaction failure in agent banks (KCB mtaani) and lack of liquidity. The study also found that security of agent banks in Kenya was bad. It was also revealed that agency banking centers experienced equipment malfunctioning and errors during a transaction very often. This study therefore recommends that KCB as well as other commercial banks in Kenya should imprive their systems so as to minimize transactions failures and errors. The study also recommends that Kenya Commercial banks shoud reduce the amount of information customers give to the agent bankers. This study also recommends that commercial banks in Kenya should ensure that their banks agents have enough float and cash to serve their customers. The study also recommends that policy makers in Kenya should increase security in estates and towns so as to reduce cases of robbery.