Bank agents’ pay matches mobile rivals despite fewer deals

Bank and mobile network operators agents earned equal incomes last year, despite the higher number of transactions conducted by the latter.

Research by Helix Institute shows both made an average Sh7,315 ($77) a month in 2014, up from Sh6,650 ($70) the previous year.

Bank agents are conducting an average of 25 transactions daily compared to 46 by mobile network operators (MNO), including M-Pesa and Airtel money agents.

“The median value of cash-in/cash-out transactions is 50 per cent higher for bank agents than MNO agents. This helps explain why the revenue is the same for MNO and bank agents ($88 per month), even though MNOs agents conduct more transactions than bank agents,” said head of Helix Institute, Kimathi Githachuri.

Agents in urban areas outside Nairobi, including Nakuru, Kisumu, Mombasa and Eldoret, are enjoying the highest profits (Sh8,606), followed by those in rural areas (Sh7,530) and Nairobi at Sh6,454.

The agents attributed the higher profits to lower operating costs owing to improved efficiency arising from a deeper understanding of the business and introduction of new revenue streams.

Sixty-four per cent of the agents said they were now doing additional business apart from agency banking compared to 54 per cent last year.

Previously, some agents had closed their core businesses to run agencies, but competition has resulted in a drop of earnings.

The survey showed only 11 per cent of MNO agents were not profitable, down from 17 per cent last year while 80 per cent were willing to continue conducting the agency business into next year.

Agency banking model was introduced in Kenya in 2010. The model allows banks to contract businesses, such as shops, hardware outlets and hotels to conduct basic banking services like cash withdrawal, deposit, checking of balances and payment of bills for a commission.

READ: Agency banking transactions hit Sh320bn mark

As at end of March, the agents made 150 million transactions worth Sh817 billion. Sixteen banks have taken up the model, contracting more than 34,381 agents.

Some of the lenders have reported their agents are now conducting more business than bank tellers, underlining the growing confidence in the model.

The number of agents offering services of only one bank has dropped to 26 per cent from 73 per cent, following passing of regulations barring exclusivity last year.

Exclusivity among agents of mobile networks, however, remains high at 87 per cent compared to 96 per cent in 2013.

Safaricom remains dominant in the agency business despite the gains recorded by retailer Equity whose market share rose to eight per cent up from 1.13 per cent a year earlier.

Two out of every three agents interviewed said they would like to be contracted by Equity Bank if they were to look for extra business.

“While Safaricom is still the largest provider in Kenya, it has experienced a substantial drop in its market presence from 90 per cent in 2013 to 79 per cent in 2014, including a 19 per cent drop in Nairobi,” said the report.

The Helix Finance report is based on a survey of 2,000 agents carried out at the end of 2014 across the country. 

Central Bank of Kenya said it had put in place regulations to ensure there were no dormant agents in the market as this would dent the confidence of the model.

“We will penalise you for dormant agents because we don’t want billboards all over advertising agents, but when someone goes in they can’t access services,” said Stephen Mwaura, the head of payments at Central Bank of Kenya.

The survey found that only 20 per cent of the agents had experienced fraud.

Mobile money services have become entrenched in the Kenyan financial system transferring an estimated Sh6.5 billion daily.