Nairobi — It has helped to raise banks' profits and spread reach of financial services in Kenya, but one thing that agency banking has failed to do in the East Africa nation is to decongest banking halls.
The banking model was started in May 2010 after Kenya changed its laws to allow commercial banks to offer their services through third-party businesses. The agents are conveniently located at commercial outlets like shopping malls, post offices, petrol stations, laundry shops, cybercafes, chemists, eateries and supermarkets. It was believed majority of people will deposit cash, withdraw and open accounts, services that most people seek in banks, through agents. But this has not effectively happened since long queues of people seeking services in banks in the East African nation have persisted despite the spread of agency banking models.
A spot check at various banks in the capital Nairobi on Monday indicated that the financial institutions are still crammed with people seeking to deposit and withdraw cash. At Kenya Commercial Bank (KCB) Moi Avenue branch, a queue at ordinary deposit counters stretched as long as 30 meters. Customers stood anxiously as four tellers struggled to receive deposits and give out cash. It was a similar situation at the direct deposit counter where customers with only 12 U.S. dollars bills are allowed to deposit cash. "This queue is moving very slowly. I wonder if we are going to be served at all. The tellers are slow and they seem to be overwhelmed," complained a man carrying a bunch of notes in his right hand.
A similar scenario was replicated at a branch of Family Bank a few meters away. The medium-sized banking hall was jam-packed with people seeking to deposit cash. The queue moved at a snail's pace but the customers seemed not to mind. One-by-one, they were served by three tellers. At Equity Bank along Harambee Avenue, a queue meandered in the small banking hall with most people seeking to deposit cash. Most of them carried money in their hands intermittently throwing glances at two tellers serving them hoping that the queue will move faster. A similar predicament befell customers at a Co-operative Bank branch near City Hall. The queue of about 50 people moved slowly as some got impatient and left, perhaps to check out if other branches had shorter queues.
Interestingly, outside the four crowded banking halls and others in the central business district and city suburbs, there are dozens of banking agents. "Co-op Kwa Jirani", "KCB Mtaani" and "Equity Agent", read signs of various banking agents on the streets of the capital. The agents have clearly listed services they offer top among them cash deposit and withdrawal. However, despite the convenience they offer, it is hard to see a queue of even five people waiting to be served by the agents. "Agency banking has not reduced queues in banking halls. Little has changed when it comes to the way people seek services in banks since the model was started," Brenda, a teller at a bank in Nairobi, said on Monday.
The teller noted that most people still find it convenient to withdraw or deposit money in banks. The result is that the long queues that characterized banking halls in Kenya before the advent of agency banking models continue to persist. The 30-year-old teller serves about 200 people each day. This is incomparable to Bernard Nzioka, a Co-operative Bank agent in Kayole estate, who serves at most four people each day. "Queues are usually long in the morning, at lunch hour and at 4 p.m. when the bank is about to close business," she said. During these hours, most of those who rush to deposit money are businesspersons. "We arrive at work at about 7.30 a.m. and by 8 a.m. people have already started lining at the bank's door yet we start business at 8.30 a.m." she recounted.
In the evening, she noted, most of those who visit banks go to deposit their days sales, in the case of businesspersons. "We close the doors at 4.30 p.m. but the queues that are usually in the bank are long. Sometimes it takes us over an hour to clear them," she said. Brenda noted that some of the things that have made people seek basic services like making deposits in banks as opposed to agents are security and confidentiality. "Although agents are officially contracted by banks, it seems people do not trust them when it comes to confidentiality. This is because they are not bank employees. Some customers feel they may leak out information," she said.
Most agencies are also located in places where customers may perceive as "high risk" and there are issues to do with fraud, which is on the rise in the East African nation. Besides that, charges imposed on customers for using agency services have also made people avoid them. "We charge customers who use agents 0.94 dollars per transaction. People thus prefer to come to banks because the same services are free," said Brenda.
In its Banking Sector Report for the Quarter Ended March 31 released last month, Central Bank of Kenya (CBK) noted there are 10,066 active agents in the East Africa nation. The agents contracted by eight banks made transaction worth 762 million dollars in the period under review. Leading in the number of agents is Equity Bank with over 3,234 agents, then KCB with over 2,600 and Co-operative Bank with about 1,800 agents. Other banks that have agents include Post Bank, Chase Bank and Family Bank.