Factors Influencing the Adoption of Agency Banking by KCB Bank Kenya Limited

Abstract

Developments in information communication and technology among other factors have brought about high level of dynamism in the operating environment. Increased competition among commercial banks and the need to improve their operational efficiency have led them to adopt a number of distribution channels. The main aim of agency banking is to expand the accessibility to financial services specifically among the unbanked population for it has been unaffordable to maintain by the banks following the smaller number of the population. This study seeks to answer one research question: What are the factors influencing the adoption or embracing of agency banking by KCB Bank Kenya Limited? The study adopted a case study design with a qualitative approach. The data was analyzed descriptively using mean and standard deviation. The findings were presented in table and narrative form. It was established that there was positive relationship between cost reduction and adoption of agency banking. There was a positive relationship between expansion strategy and adoption of agency banking. The respondents noted that there was a positive relationship between diversification strategy and adoption of agency banking. They also said that there was a positive relationship between information and communication technology and adoption of agency banking. The researcher inferred that there is positive relationship between cost reduction strategy, expansion strategy, diversification strategy, and information and communication technology and adoption of agency banking at KCB. The researcher recommends that a little more efforts need to be put to reduce the costs associated with agency banking further since there is a lot of competition from other banks in the sector. The KCB management need to pay more attention to the implementation of their expansion strategy since it’s not bringing optimal outcomes insofar adoption of agency banking with the bank is concerned. The management of KCB need to ensure that their product diversification strategy is vibrant and competitive, there is need to benchmark with other players in the industry. The researcher recommends that KCB needs to further advance and expand their information and communication technology infrastructure to better march the market needs and put the bank a head of other players in the market. The study suffered a limitation in that the researcher was not in a position to eliminate bias and subjectivity completely, the study targeted the employees of KCB who may portrayed a false image of the situation. Therefore some information may not be accurate. The researcher suggests that a study be done on the direction and degree of change on the bank’s overall performance given the adoption and growth of agency banking.