Challenges Facing Growth of Agency Banking in Kenya: A Case of Kisii County

Kenya legitimized agency banking act 2009 to enable Central Bank of Kenya to license banking agents for commercial banks. However, even with current 45, 500 agents offering financial services, the penetration rate is still a challenge, for many banks have not embraced the model

In this line, the current study sought to establish the challenges facing growth of agency banking in Kenya. The study sought to establish the effect of technological requirements, customer's attitudes, customer information confidentiality and insecurity on agency banking in Kenya. The study is hinged on the agency theory, diffusion of innovations theory and stewardship theory. The study used a descriptive research design. A sample was drawn from the target of 310 agency banks in Kisii County. The Fisher formula was used to arrive at a sample size of 96. Data was collected through a questionnaire. The study recommends that agency bankers should aim to improve the technology under which agency banking operates since it leads to an improvement in growth of agency banking in Kenya. Agency bankers should not change their system frequently. They should also adopted modern technology in their operations. The study also concludes that agency bankers should enhance customer information confidentiality because it leads to an improvement in growth of agency banking in Kenya. The agency bankers should enhance customer information security system, their integrity in keeping secrets, adoption of a risk-based approach for combating money laundering and terrorist financing as well as value customer data privacy. The study also recommends that agency bankers should aim to change the customer's attitudes and perception towards agency banking by diversifying the products and creating awareness in the new products, coming up with products which are easy to use, available and tailor made.