Bank agent transactions hit Sh105bn in seven months

Commercial bank agent transactions shot up by Sh12 billion in July to Sh105 billion in the first seven months of the year, the Central Bank of Kenya (CBK) has said.

New data by the banking sector regulator shows the agents facilitated 21 million transactions by the end of July, compared to 18.7 million in June.

The high growth shows the agency banking concept is helping to improve financial inclusion. Central Bank Governor Njuguna Ndung’u said the agents have increased to 12,000, appointed by 11 banks.

READ: Bank agents grow by 20pc as lenders aim to cut costs

Prof Ndungu was speaking Tuesday during the 50th anniversary celebrations for the Kenya Bankers Association.

Donald Kaberuka, president of the African Development Bank (AfDB), who was the chief guest at the event, said Kenya’s efforts in financial inclusion had enabled the financial sector to rank fifth in asset size in Africa.

He noted that the sector had assets amounting to $25 billion. Dr Kaberuka said that the mobile phone money transfer had greatly contributed to banking the unbanked in Kenya.

Earlier, the CBK had released figures showing that in the three months to the end of June, the number of agents contracted by banks rose by 20 per cent, indicating a strong uptake by lenders who are seeking to reach more customers in a cost-effective way.

In the same period, CBK data showed that 10 commercial banks had contracted 12,054 active agents by the first half of this year, up from eight that had contracted 10,006 agents as at the end of March.

In the six months to June, the number of bank branches stood at 1,196 a two per cent from 1,174 branches in March. But some bankers say the model is yet to make economic sense to them.

Barclays Bank of Kenya CEO Adan Mohamed said during a press briefing Tuesday the agency model is still risky and costly.

“The agency banking model still has several operational risks and costs such as high insurance costs which have made such an investment unattractive for us and therefore we will not delve into it immediately,” he said.

“We prefer to use a different route in order to capture the same target market and this is through services such as our free revamped mobile banking services.”