CONTRIBUTION OF AGENCY BANKING TO KENYA COMMERCIAL BANK’S CUSTOMER BASE AS A COMPETITIVE STRATEGY

Abstract

The introduction of agency banking in Kenya was meant to facilitate and enhance access to affordable financial
services especially to the poor, low-income households and micro and small enterprises, which largely comprise
those segments which are un-served and under-served by the financial sector. This was based on the promise
that financial access leads to widespread economic development, and hence the development of the financial
sector is seen as essential to the realization of Vision 2030. The objective of the study was to determine the
contribution of Kenya Commercial Bank agency banking to Kenya Commercial Bank’s Customer Base as a
competitive strategy. The theoretical framework was based on 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 proportionate stratified sampling method was used to get
representative sample members from each of the KCB branches. Structured questionnaires were used as the
data collection instruments. The research findings were analyzed through SPSS and the results presented in
tables. The descriptive statistics that were used include the frequency distribution and chi-square. The study
concludes that the adoption of agency banking as a competitive tool in KCB is perceived to have contributed
positively towards the achievement of strategic objectives. The respondents perceive KCB to be a market leader in
terms of agency banking. It has also increased penetration of the bank to the unbanked population. The study
recommends that Kenya Commercial Banks consider coming with a clear agency banking regulatory policy
which creates a universal platform and intensify the agency banking network which will ensure services
accessibility by customers and thus improve financial performance.