COST OF BANKING TRANSACTIONS THROUGH AGENCY BANKING AS A COMPETITIVE STRATEGY: A CASE OF KENYA COMMERCIAL BANK IN NAKURU COUNTY, KENYA

Abstract

The need for a competitive strategy was informed by the intense competition in terms of profitability and market
share of the different banks. Agency banking is the new innovation that banks are using to take services to the
un-banked and under-banked at a cheaper rate as the concept takes customers out of the bank halls to kiosks
and villages. The objective of the study was to examine the cost of banking transactions through agency banking
at Kenya Commercial bank as a competitive strategy. The theoretical framework was based on the financial
intermediation theory and Porter’s competitive strategies theory. The research design of the study was the
descriptive survey design. A sample size of 236 respondents derived through the Yaro Yamane formula was
used. The stratified sampling method was used to get representative sample members from each of the KCB
branches. The study also used structured questionnaires as the data collection instruments. The research
findings were analysed through SPSS and the results presented in tables. The descriptive statistics that were
used include the frequency distribution and chi-square. The study concluded that agency banking has become an
important delivery channel for financial services to aid operational costs of banks and also to actualize the goal
of competition. It recommends that banking institutions come up with lock-in strategies for the already captured
market to help them control the prices and services they offer customers.