Agency banking spurs 17% surge in bank deposits to Sh5.6 trillion
Bankers in Kenya saw customer deposits go up by 17.5 percent to Kes5.6 trillion in the 12 months ended December 2023 attributable to increased investments in agency banking and mobile phone systems.
According to the Central Bank of Kenya’s industry supervision report, the adoption of the agency banking model increased last year with both mainstream banks and microfinance institutions tapping on this initiative to mop up deposits.
Customer deposits are the main source of funding for banks, providing affordable capital for onward lending and investments for the lenders.
In the year under review, the delivery of financial services in Kenya through agency banking model saw 16 commercial banks and five microfinance banks (MFBs) contract a total of 87,531 and 677 agents, across the country.
“As at December 2023, commercial banks recorded 82,780 bank agents, while MFBs agents were 921. The change was an increase of 4,409 commercial bank agents (5.6 percent) and a decrease of 277 MFB agents (25.1 percent),” CBK report states in part.
However, the regulator’s survey pointed out that nine out of every 10 approved ban agents were contracted by banking giants Equity, KCB, and Coop Bank.
Read also: Subsidiaries push Equity Q1 profit up 25% to Sh16 billion
In this segment, Equity Bank led in the market with 40,211 agents, with KCB coming a distant second with 24,055 agents. As of December 2023, Coop Bank had signed 15,519 agents across the country.
“On the other hand, for the MFBs, over 90 percent of the agents were contracted by the two largest MFBs – Kenya Women Microfinance Bank Limited (127 agents) and Faulu Microfinance Bank Limited (409 agents),” CBK said.
However, industry disclosures show that the number of banking transactions processed through bank agents dipped by 8.3 percent to 145.3 million transactions in December 2023. This was attributable to a lower number of transactions related to deposits, withdrawals, and payment of bills.
“The decrease was attributed to increased use of mobile money and internet banking,” noted CBK.
Overall, the value of banking transactions carried through agents dropped to Kes1.7 trillion (USD 10.5 billion) in December 2023, from Kes1.8 trillion (USD 15.2 billion) in December 2022.
