By Munene Maina
The technological advancements sweeping the financial sector and the high cost of opening and running branches have forced Savings and Credit societies to re-strategize to beat the competition and grow their businesses.
Most Saccos are now rolling out agency banking or opening satellite branches to extend their reach and reduce operation cost that comes with opening a fully licensed branch.
Information and Communication Technology has enabled most Saccos successfully run effective and secure agency banking to the remotest of places in the country.
The service has played a pivotal role in enhancing the penetration of banking services in unbanked markets besides enhancing the access of the full range of banking products within a less than formal setting.
In Kiambu, Githunguri Dairy and Community (GDC) was the first Sacco to roll out agency banking service in the county.
According to Sacco Chairman Joseph Kiiru this was in an effort to bring services closer to its 23, 318 members.
A 2016 study done by World Bank in Africa found banking agents double up as the backbone of electronic money banking since they perform transactions over a bank device, to enable clients to convert cash into electronic money and vice versa.
As more Saccos in the country incorporate technology in their day-to-day operations, agency banking plays an important role in deepening financial inclusion. This means more business and earning for Saccos.
This is because agents are trusted local retailers that double as lower-cost alternatives to branches and enable customers to more conveniently make deposits, withdrawals, money transfers, and payments on loans.
Individuals directed to an agent increase the overall number of deposits and withdrawals compared to individuals directed to the branch, the research found.
Kericho based Patnas Sacco which has successfully operated SWIFT CASH; a mobile banking service is now in advanced stages of opening agency banking to serve more members in its catchment areas.
“We hope that the service will improve members’ engagement with the Sacco, although we also have plans to establish more branches,” said Sacco Chief Executive Officer, Nelson Rono.
“Agency banking is another convenient platform to reach more members especially in remote rural areas that are not served by branches,” said Nawiri Sacco Marketing Manager, John Muriithi.
He said the Sacco is relying on their agents at various market centres to reach out to the elderly members who are unable to embrace mobile phones as a banking tool.
Unaitas also recently opened bank agents in Kisii town, a strategic move aimed at increasing its footprint countrywide.
“This will enable us to bring onto fold smallholder tea farmers through agency banking,” said Tonny Mwangi, institution’s CEO further bringing stiff competition in a region with over 20 financial institutions.
He stated that through this model, they will have a competitive edge over other players involved in Chama banking.
Kitui Teachers Sacco Chairman, Dr Joseph Kithome, said the society will soon launch agency banking to enable members have access to financial services, especially where they have no branches.
In Bomet, Kenya Midland Sacco also plans to increase revenue base by introducing agency banking where members can transfer money through M-Pesa and KCB Mtaani as well as the transfer of the elderly funds according to Sacco chairman Charles Mutai.
Bandari Sacco which recently acquired a satellite office at Nairobi City hopes to use the office to provide marketing and agency banking services.
This is intended to bring services closer to the Sacco’s expanding customer base at ICD Nairobi, SGR and the surrounding target-market of companies.
One of the leading Saccos in Embu County, Winas Sacco expanded its agency banking services, after six months piloting approved by SASRA, adding 11 more ‘Winas Mashinani’ agents at Kithimani, Matuu, Kathageri, Karurumo, Runyenjes, Manyatta, Kathangariri, Muraru, Kanja, and Kianjokoma.
“Members can now access services without travelling long distance. We request members to embrace and patronise the services offered at nearest agents,” said Sacco Chairman Robert Ndwiga.
Tower Sacco, which is based in Nyandarua County has partnered with Fintech Solutions Limited to roll out agency banking within the current financial year.
Other Saccos such as Nikodigi, Muki and Kenya Highlands are exploring possibilities of providing agency banking services in future to grow their business.
Most Saccos have taken robust measures to secure their systems to curb any loss of funds through the use of technology in unscrupulous ways.
Although studies conducted locally have recommended embrace of agency banking in the financial sector, security concerns have lingered for agents.