The impact of agency banking on Kenya’s economy

Agency banking is such a force in today’s fast-changing and evolving financial services environment. This unique model of offering financial services empowers banks to offer their services through various accredited individuals instead of branches.

As a business that operates in the financial services industry, agency banking is a breakthrough to diversify your portfolio and tackle key issues, such as financial exclusion. The branchless banking solution implemented in Kenya's banking industry not only reduces the operational cost but at the same time provides important banking facilities to under-banked individuals. It has been most useful in the rural regions of Kenya where the establishment of physical bank branches is highly limited.

Perhaps it is high time we took a closer look at how agency banking in Kenya is revolutionizing Kenya's economy and why a sound agency banking software solution is critical to that process.

Let’s dig in! 

What’s an agency banking software solution?

An agency banking software solution is a tool that supports the operation and monitoring of agent banks in banks’ networks. It gives you ways to facilitate your transaction and other related processes without any hindrances, real-time information as well as meeting the various regulatory requirements. 

Right from cash deposit and cash withdrawal, payment of bills and balances, account opening among other services, such solutions enable the agents to offer a number of banking facilities on behalf of your bank.

In the case of your business, integrating an effective agency banking software system can assist in improving operations, customer satisfaction, and revenue. Such features as the ability to track transactions, implement some of the security measures, and connect to core banking systems are critical to guaranteeing that your agents work effectively with customers’ trust uncovered by the software.

Impact of agency banking on Kenya’s economy

1. Financial Inclusion

Agency banking has been central in the enhancement of financial inclusion between the urban and rural sectors. Agents placed in even the most rural areas mean the customers who were locked out of financial instruments are now able to access them. It has also turned consumers and small traders into savers, borrowers, and active players in the economy.

2. Cost Reduction for Banks

It is costly to establish the physical outlets for the bank for instance the branches in the areas of low customer density. Branchless banking has especially helped Kenya financial institutions to bring down the overhead costs greatly. What it means for you is the probability of higher ROI, and the opportunity to reallocate the funds to fund other crucial activities.

3. Employment Opportunities

Agency banking provides employment opportunities that have provided job ventures to thousands of people throughout the country. Both parties find a way to make a living; agents as middlemen that benefit from the transactions and banks from the decentralized workforce. This mutually beneficial situation is very instrumental to the general economic stability of Kenya.

4. Growth in Digital Payments

With an increase in the uptake of agency banking services shown in money transfer agencies, there has been a rise in the adoption of digital payments. When you base your agency banking use of mobile money platforms to compliment your software solution, you will be empowering the customers and at the same time, which will minimize the usage of cash.

5. Increased Savings and Investments

Most organizations in Kenya including individuals and small business enterprises have adopted agency banking hence promoting saving and investment. That way, customers can have their money with you, in a safe manner and invest in products such as savings accounts and other related investment products. 

This increase in financial activity is beneficial to the economy as the saved and invested money is used for purposes that may also enhance the country’s development.

Conclusion

Agency banking in Kenya has actually shifted the traditional methods of financial product delivery to their best. For you, as a stakeholder in this ecosystem, the opportunity is in finding the right technology that enlarges your market space and makes your customers happier as well as supporting economic development. 

Through the active use of a branchless banking solution, you are not only going to make much more money than you are now or that you have set for yourself but also play a very social role in the advancement forms of agency banking solutions for the improvement of people’s lives.