Forecasting short term demand for money transfer services in Kenya Post Office Savings Bank

Abstract

Kenya Post Office Savings Bank (KPOSB) plays a major role in the Kenyan economy. Postbank is mandated by the KPOSB Act to mobilize savings among the citizens for national development and at the same time it is the major agent of Western Union Money Transfer (WUMT) services in the country. Like other businesses, KPOSB faces challenges resulting from the changes in the business environment. Among these challenges include the demand forecast of WUMT services customers. Forecasting techniques could be used in solving this problem. It is within such background that this study was initiated to determine if KPOSB -WUMT service customers demand could be modelled using regression analysis. This study developed forecasting models for customers demand in two categories, that is, inbound transfers and outbound transfers. In the development of the models, both technical and managerial aspects were considered as viewed by KPOSB management. The models were validated by using six months data. The models developed were found to be better than the current methods being used as the level of variance was reduced. The variances from the models developed were within the acceptable limits of 5 percent for the outbound transfers and above 5 percent for the inbound transfers, as a result only the model for out-bounds transfers could be recommended for short term forecasting.