Mengo NAIROBI (Xinhua) -- The last time Kenyan
businessman Ben Musumihe went to a commercial bank to deposit
money was three months ago.
All the clothes dealer does these days
is to walk to his bank’s agent located some 50 meters from his
stall at Mutindwa on the east of Nairobi, Kenya’s capital, and
deposit the cash.
The same happens when he wants to
withdraw money from his bank account as he goes to the agent,
who is near than the bank’s ATM.
“I used to be a strong believer of the
banking hall. I could not transact any banking business
outside the bank because I felt my money must be handled by
the employee of the institution for it to be safe, but
things have changed,” he said.
The change of heart came when his bank
welcomed agents to work from inside its branches, therefore,
doing away with tellers especially for cash deposits.
“There is no need for me to visit the
bank about 2 km from my business and be served by an agent
yet I can get the service closer,” said Musumi.
The strategy to use agents is adopted
by several major commercial banks in the East African nation to
decongest their banking halls, and therefore cut costs
associated with employing tellers.
While some are using agents within
their premises, others are rejecting small cash deposits and
directing customers to agents outside the institutions and the
rest have transferred transactions to the ATMs and mobile
The moves have consequently directed
customer traffic off the banking halls, which at one time were
once notorious for congestion.
“A chunk of our deposits are currently
being transacted by agents both out and within the bank. The
move to bring in the agents was deliberate to encourage
customers not to come to the banking halls as they can be
served by the same people wherever they are,” said Caroline
Wairimu, an employee of a commercial bank
Agency banking was introduced in Kenya
in May 2010 after the East African nation changed its laws to
allow commercial banks to offer their services through
The agents are conveniently situated
at commercial outlets like chemists, eateries, supermarkets,
shopping malls, post offices, petrol stations and laundry shops.
It was expected that majority of bank
customers would deposit cash, withdraw and open accounts through
However, until a year ago, the agents
were under-utilized as Kenyans have had deep-seated belief in
the brick and mortar banks.
A spot check at various commercial
banks in the capital Nairobi on Thursday indicated that the
financial institutions halls are these days virtually empty.
At Kenya Commercial Bank’s Moi Avenue
Branch, there were a handful of customers, with those seeking to
make cash deposits encouraged to do it through agents.
Initially, lines at deposit counters could stretch for up to 30
At Cooperative Bank’s Haileselasie
branch, three agents stationed inside the institution were
serving several customers. Months ago, it was common for the
bank hall to be crammed with customers, a good number of them
seeking to make deposits.
The institution started working with
agents in January last year in a bid to lure customers to
alternative banking channels and cut costs.
“Over 70 percent of our previous
branch transactions have been migrated to alternative
channels including the agents, improving convenience for
customers while reducing bank operation costs,” said the
bank in a recent statement.
The bank noted that for branches where
customers have substantially migrated, the agents have been
withdrawn from the banks and transactions are now done away from
the banking hall.
Agency banking has helped the
financial institutions cut costs associated with permanent
employees as the agents are only paid commission.
Central Bank of Kenya data indicated
that as at 2016 there were at least 45,000 commercial bank
agents in the East African nation, transacting more than 1.5
Henry Wandera, an economics lecturer
in Nairobi, noted that commercial banks in Kenya have no choice
but to push customers to agents and other channels especially
after the capping of interest rates to cut costs.
“Agents have helped some banks cut up
to 30 percent of staff costs, the reason why banks are
embracing them besides taking services to ATM and mobile. It
is a big win for banks as they push customers out of banking
halls. It is a matter of time before customers completely
keep off banks,” he said.