× Digital News Videos Opinion Special Reports Lifestyle Central Coast Eastern Nairobi North Eastern Nyanza Rift Valley Western Business News Stocks Financial Standard Africa Asia America Europe Weird News Editorial Commentary Letters Crazy World Features Entertainment Money & Careers Health & Science Sci & Tech Home & Away Generation Next Cartoon Education Pointblank Environment Travel & Destination Columns Kipkoech Tanui uReport Kiambu Murang'a Nyandarua Kirinyaga Nyeri Baringo Bomet Elgeyo Kajiado Kericho Laikipia Nakuru Nandi Narok Samburu Trans Nzoia Turkana Mombasa Kwale Kilifi Tanariver Taita Taveta Kakamega Vihiga Bungoma Busia Siaya Kisumu Homabay Migori Kisii Nyamira Nairobi Uasin Gishu West Pokot Sunday Magazine The Hague Trial Kenya @ 50 Education and Training Health and Environment Insurance and Financial Security Housing Current Affairs Humour Makau Mutua David Oginde Clay Muganda Comand Your Morning Mohamed Wehliye Wednesday Life Alexander Chagema Arts & Culture Kamotho Waiganjo Barrack Muluka Xn Iraki Urban Rights - By Steve Ouma Branding Voice KCB Fredrick Ogola Sunday Magazine Wanja Kavengi Njoki Kaigai David Oginde Ken Opalo Daisy Maritim Houghton Irungu Hustle News Group Stages Round of 16 Quarter Finals Semi Finals Finals Third Place play-offs Opinion Dr Pesa Podcasts Round Table Sepetuko Eve Woman Ramadhan Special Fact Check Correction Explainers The Standard Insider Blog E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS

Agency banking in slow death as billions shifted to mobile

By Dominic Omondi | December 7th 2019 at 04:10:00 GMT +0300

Agency banking is fast losing its appeal after pensioners and beneficiaries of State funds ditched the service for mobile banking in 2018.

Payment of retirement and social benefits through agency banking last year declined significantly by 94 per cent to Sh1.1 billion from Sh19 billion in 2017, with most recipients opting for a mobile banking-enabled payment service.

Moreover, payment of utility bills such as electricity is also shifting to mobile money. Payment of bills through bank agents dropped from Sh13.7 billion in 2017 to Sh11.6 billion, though the platform remained popular for cash deposits and withdrawals.

The value of banking transactions undertaken through agents increased from Sh1 trillion in December 2017 to Sh1.18 trillion in December 2018, according to a new report by the Central Bank of Kenya (CBK).

This growth was mainly driven by cash deposits which grew by 14.4 per cent to Sh906 billion from Sh791.7 billion the previous year.

Cash withdrawals in the period under review grew by 7.6 per cent to Sh269.1 billion from Sh175.2 billion in 2017, even as Sh458 million was transferred through the bank agents.

“Despite the overall increase in the value of transactions, there was a decline in transactions relating to payment of retirement and social benefits and payment of bills in the year 2018,” said CBK in the report.

A new payment model, Inua Jamii, transfers regular stipends to beneficiaries who include people over 70 years and orphans.

“One of the important benefits of the new programme is that it reduces distances covered by beneficiaries in accessing banking services as well as reducing over-reliance on care givers by giving beneficiaries more control of their accounts,” said Labour and Social Protection Cabinet Secretary Ukur Yattani last year when they unveiled the programme.

The programme targets a total of 1.3 households, with around five million Kenyans being direct beneficiaries. Since its inception in 2004, the government has spent Sh125.7 million.

Inua Jamii operates through four banks - Cooperative, Equity, Postbank and KCB. The method is mobile banking-enabled where beneficiaries are able to pull their money directly from bank accounts and withdraw from mobile money agents.

Consumers are also trying to reduce distances in accessing banking services when paying bills. As a result, payment of bills through agency banks reduced by 15.5 per cent from Sh13.7 billion to 2017 to Sh11.6 billion in 2018.

During the period under review, 19 commercial banks and five microfinance banks had contracted 59,578 and 2,026 agents, respectively, recording a decrease from 61,290 and 2,068 agents respectively by December 2017.

The change implies a decline of 2.8 per cent (1,712) and 0.02 per cent (42) in the number of agents contracted by banks and microfinance institutions.

“The decline is attributed to the closure of some of the agents due to low business volumes and low income earned by the agents, rendering the agents inactive,” said CBK.

Read More