Factors influencing the use of agency banking by bank customers in Makueni sub-county, Kenya

Abstract

There is adequate literature suggesting that agency banking is one of the essential services in the banking sector. Agency banking has become popular in bringing the banking services closer to the people particularly in the rural or remote and hard to reach areas. This study investigated the factors influencing the use of agency banking by the bank customers in Makueni Sub-Sub-County, Kenya. This study was guided by the following objectives; to determine the influence of agent characteristics, the banking products offered by bank agents, agent operating hours and the bank location on the use of agency banking by the bank customers in Makueni Sub-County. This study was also guided by two theories; the Diffusion of Innovation Theory and Innovation Theory. This study used descriptive survey research design and the target population was 276 bank customers in Makueni Sub-County. Systematic sampling techniques were used to generate the study sample. This study used questionnaires as the main method of data collection. The quantitative data was analyzed using descriptive statistics; mean mode, median, frequency and percentages as well as inferential statistics with the help of Statistical Package for Social Scientists (SPSS version 20) and then presented in tables. Qualitative data was analyzed thematically according to the study objectives. The used a regression model (Y = C + β1X1 + β2X2 + β3X3 + β4X4) and it had four main findings which revealed that the use of agency banking had a constant of 0.160 while the four variables studied had beta values as follows: +0.123 (Agency characteristics), +0.301 (Banking products) +0.123 (Operating hours) and +0.037 (Location of the mainstream banks). Since all the beta values were positive, it was concluded that there was a high correlation between the banking products and use of agency banking. The study recommends that, commercial banks should do more advertising to sensitize the public on the types of the services available at their agents, they should diversify the products they offer to their customers at the agencies to include credit facilities if they want to increase the usage of agency banking services. The agents are encouraged to have high amount of float so that it is possible to carry out transactions involving large amounts of money so that customers are not forced to visit the bank branches in such situations. The banks should also develop and communicate the official operating days and time to enhance their service delivery and uniformity among similar banking agents.