Global Journal of Commerce & Management Perspective
Open Access

ISSN: 2319-7285

+44 7480022681


Customers’ Perception of Agency Banking in Kenya: Case Study of Equity Bank Kenya Limited

Charles Gitonga Ndungu and Wario Guyo Wako

One of the reasons why agency banking has a high appeal among the retail banks in Kenya is the expectation that it holds the key to decongesting banking halls which has been a teething problem among the banks. Recent studies in this field have shown that while agency banking has increased profitability of banks in Kenya it has not succeeded in decongesting the banking halls. This study was concerned with investigating the liquidity (float) adequacy of bank agents and how it shaped the perception of bank customers on agency banking and thus their decision whether to transact at an agent or at bank. The research was carried out through an e-mail administered questionnaire on 263 Equity Bank Kenya Limited agents’ supervisors across the country. Simple random sampling was used to select the case study bank. Transactions values were classified into 10 classes each with a Kes, 5000 range, the lowest class being 0- 5,000 while the highest class was 45,001-50,000. G- Logit Model was used for inference. Upper limits of each class {(X) the independent variable} was regressed against the log of odd ratio of dichotomous dependent variable (Y) where positive perception was denoted as one (1) while negative perception was denoted as zero (0). Analysis of findings was both descriptive and inferential. Customers had positive perception of adequacy of agent float for transactions up to Kes 5,000. On average, for every increase of Kes 5000 in transaction size, the odd ration in favor of positive customers’ perception for transactions above 5,000 reduced by 99.9% which was in line with the researcher’s expectations as the average transaction value had been calculated as Kes 5,525. In conclusion agency banking was seen to have created an additional market segment to the banks which increased profitability of banks from increased deposits and transactions through deepening of financial inclusion. However the bank agency model could not decongest banking halls as customers and transactions also increased.