Agency Banking and Accessibility to Financial Services: A Survey of Commercial Banks in the Northern Province of Rwanda

Abstract

This research project was on assessing the effects of agency banking on accessibility to financial services in commercial banks in the Northern Province of Rwanda. Agency banking has become one of the essential services in the banking sector in bringing their services closer to the people who are in the remote areas where branches are not present. The purpose of this study was to analyze the effects of agency banking on accessibility to financial services in commercial banks in the Northern Province of Rwanda. The researcher was guided by the following objectives: to investigate how operational structure of agency banking influences customer’s access to financial services in commercial banks in Northern Province, to establish the relationship between brand images of agency banking and accessibility to financial services in commercial banks in Northern Province, to determine the effects of agency banking on customer’s access to financial services in commercial banks in Northern Province. The study adopted a descriptive research design. The population was 555 agents under which sample size was 233 people found using Yamane formula. The study used stratified and simple random sampling method. Also different research instruments of data collection were used which include: journal, articles, documents analysis and questionnaires. The reliability of the study was tested by carrying out a pilot research and found that Cronbach's Alpha of .831. The data was analyzed using SPSS version21 and data was presented using tables, percentages, means, and standard deviations. To analyze the relationship between two variables, Pearson Chi-Square and Pearson correlation were used to come up with comprehensive results. It was clear from the study that strategic responses to implementation of agency banking as a competitive strategy in enhancing customer’s access to financial services included provision of high quality customer service, enhancing operational structure and improving the brand image. The study established that operational structure, brand image and financial services awareness among the rural population are positively correlated (r = 0.805) with access to financial services. Access to financial services was greatly enhanced by strategically increasing the proximity of agency banking services, increasing the number of services that could be offered through agency banking and increasing awareness among the population on financial services available at agency banking outlets. The study recommended that Commercial banks should ride on the successes made in agency banking to scale up access to financial services hence financial inclusion by opening up more outlet networks to considerably reduce the distances covered by the rural poor. Moreover the study recommended improvement of brand image of all agent banks operating in the retail market. Finally the study recommended that information and awareness should be put in public to build confidence and trust in agency banking as a secure, efficient and modern way of banking.