KCB targets agency banking to cement market position

By Nicholas Waitathu

Kenya: Battle among financial players has intensified as commercial banks reach out to potential customers in the low-end market.

The agency-banking model introduced in 2010 after the amendment of the Banking Act is turning out to be the favoured weapon in this fight as the banks look to the bottom of the market segment.

The banks have so far opened over 20,000 agency banking outlets mainly in areas occupied by the low to middle income earners.

Kenya Commercial Bank (KCB) Head of Agency banking David Ndome confirmed that through the agents, his bank has enlisted more customers mainly in the low-end market in the recent past.

He said the bank has opened 8,000 agents for the last three years and thus able to bring on board majority of unbanked Kenyans.

“We are transacting more than Sh50,000 every day in all the operating agents as well as opening 3,000 account every day,” said Mr Ndome in an interview.

The KCB agents, he said are holding deposits to the tune of Sh1 billion and the figure is projected to rise as the bank opens more outlets.

Services platform

The bank projects to increase the agents to over 10,000 by the end of the year. It is opening the outlets under the KCB Mtaani services platform.

According to available data, agency banking has helped financial institutions generate more commissions, gain new customers and collect cheap deposits at a time when the industry’s loan book was flat.

According to the Central Bank of Kenya 2013 annual report, use of the agency banking model by banks has continued to improve access to banking services since its launch in 2010.

As at June 30, 2013, CBK adds it had authorised 13 commercial banks to offer banking services through third parties (agents).