Diversity Of Global Agent Banking Models And Its Applicability

According to McKay (2010) there is global concern to entrench financial access to previously ignored hence the emergency of agency banking. This has been adopted in several countries around the world Brazil being the first in 1999 Colombia and Pare have been declared to be the countries with the highest number of banking agents Agency banking was first introduced in Brazil making it pioneer. In 2010 approximately 170000 agents had been put in place in 5500 municipalities. This led to opening 0f 12 million accounts through agent in last three years.

Brazil has demonstrated to other countries that rules and regulations allow banks to contract an agent this has helped the unbanked in Brazil especially in rural areas and is being replicated in other countries. Agent networks in Peru are concentrated in urban areas with an aim to reduce congestion in banks pushing low value transactions away from costly branches. This has made the agents to be located within a block or two from the same bank. Report by McKay says from august 2010 to July 2011 in Colombia collections of utility bill payments through agency banking made the majority of transactions averaging 1.8 million followed by mandatory payments such as loan repayment and official government payment such as tax accounting.

Although more withdrawals than deposits have been made reported the numbers of these transactions types were consistently closer yet the number of credit applications money transfer and savings accounts were negligible 1.1 agency banking central bank of Kenya (CBK 2010) reported that Kenya adopted agency banking in 2010 and it has grown to have more than 10000 banking agents over the years with affiliation to commercial banks. The Banking Act was amended through the Financial Act of the year 2010. The new law was to allow commercial banks to contract agents to offer financial services to the unbanked population. Central Bank of Kenya issued guidelines for agency banking which allowed banks to start recruiting retailers as agents. Agency banking in Kenya should concentrate on security measures and less risky approach to screen agents giving away for large cash transaction to be handled through them. The challenge of accessing formal financial services still remains a big impediment to financial inclusions. Kenyans in remote areas had to travel long distances in order to access a branch. To curb this challenge legislation that allows commercial banks to contract third part retail network as agents was released.

This Banking Act in 2010 made it legal for banking agents to be used in Kenya as at June 2013 Central Bank of Kenya is regulating 44 authorities with 44 baking institutions whereby 43 are commercial banks and one is a mortgage finance company. Out of the 44 banking institutions 30 were locally owned banks 13 banks have been licensed by the central bank to operate agency banking services these include Diamond Trust Bank, Kenya limited, Post Bank limited, Equity Bank limited, Consolidated Bank, Cooperative Bank limited, Chase Bank limited, Citi Bank limited, Family Bank limited, Kenya commercial Bank limited NIC Bank limited, Ecobank and National Bank of Kenya. Kitaki (2001) indicated that equity is a commercial entity that has been contracted by Equity bank agency banking in Kenya has grown faster in terms of shares becoming the second largest in terms of agent share at 11% .despite growth of agency banking these are challenges like lack of confidentiality as transaction are not done in a way that that the other customer can deposit or withdraw cash. According to DIAS (2010) commercial bank urgent can be defined as a non-bank correspondent or commercial business that provides financial or banking services on behalf of formal commercial bank.

The Agent perform the following transactions on behalf of the bank ;collection of document in relation to account opening, credit and debit card application, cash payment of salaries, transfer of funds and balance inquiry. Development in technology like use of mobile phones has contributed to current development in agency banking. Banking agent are equipped with tools such as mobile phones, scanners to scan bills, card reader, personal identification and sometimes personal computers that connect with the banks sever using the person dial-up or other data connection. Iratory and Lyman (2006) established that unless tight regulations are eased, few retails outlets would be able to meet the standard required by the policy makers. This has exposed agency banking to some challenges like if a customer needs to withdraw a large amount in most cases, the agent does not always have enough cash to enable the transactions .The bank also generate automatic receipts from integrated printers into the point of sales terminal and text message send to the customers mobiles phones with the banks name for any withdrawals of cash banking agent functions is to advocate for savings by reducing cost and minimizing credit risk.