Capital Markets

Value of agency banking up Sh900bn on demand

agency

A signage shows agency banking and mobile money services at a Nyeri shop. PHOTO | JOSEPH KANYI | NMG

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Summary

  • The data shows contracted banking agents handled 800 million transactions in the year to June, marking a Sh900 billion increase in the value of transactions compared to a similar period the previous year.
  • Many customers eyeing convenience have lately taken to agency and digital banking, reducing branch traffic to comply with Covid-19 control measures such as social distancing to lower risk of contracting the virus.

The value of agency banking transactions jumped by 18.75 percent to Sh5.7 trillion in the year ended June 2020, new Central Bank of Kenya (CBK) data shows, adding pressure on brick-and-mortar branch jobs.

The data shows contracted banking agents handled 800 million transactions in the year to June, marking a Sh900 billion increase in the value of transactions compared to a similar period the previous year.

“The number of transactions via agents increased from 717.3 million in the year ended June 2019 to 815.3 million transactions in the year ended June 2020,” CBK says in its annual report.

Many customers eyeing convenience have lately taken to agency and digital banking, reducing branch traffic to comply with Covid-19 control measures such as social distancing to lower risk of contracting the virus.

For example, Equity bank last week disclosed that value of transactions on its digital platform in the nine months to September surpassed those conducted at the physical branches for the first time ever, driven by deepened customer shift to cashless transactions in the wake of Covid-19.

Data by the lender shows the value of transactions on its digital platforms such as Equitel and EazzyBiz grew 25 per cent or Sh396 billion to Sh1.988 trillion to dwarf in-branch dealings between March and September.

The shift towards agency and digital banking has had an impact on teller jobs over the years, with many lenders laying off excess staff.

Only this month, several banks have announced job cuts affecting hundreds of staff including branch closures.

NCBA was first to announce it will lay off hundreds of workers ahead of December following the end of one year freeze to sack staff after the merger of CBA and NIC Group.

The merged lenders had over 100 branches serving 40 million customers and Competition Authority of Kenya allowed them to close branches in locations where there were overlaps on the understanding that the merging parties had indicated that they intend to open new branches in other locations.









NCBA said they closed 13 branches and relieved a bit of temporary workers and continued to evaluate the company workforce to increase efficiency.

Standard Chartered Bank Kenya announced it is laying off 200 employees or 14.3 per cent of its workforce as the Covid-19 pandemic continues to ravage bankers’ profits.

The bank says its digital transformation strategy that started in 2016 has necessitated a restructuring of its workforce, leading to elimination of some roles.

KCB Managing Director Joshua Oigara said they will not be cutting staff numbers this year but are continuously looking at their staffing structure to give employees new roles in line with the digital reality.

“The first priority is to give staff an opportunity where there is new business so as we digitize our customers and invest in digital financial services that is where a lot of our activities will continue as we go into enhancing our agency network, that is where a lot of resources will go,” he said.