Strategic Challenges and the Implementation of Agency Banking by Co-operative Bank of Kenya

Abstract

In Kenya, agency banking is regulated by the Finance Act, 2009 that became operational in January 2010. The Central Bank of Kenya published on May 3rd 2010 the guidelines under which the agency banking model will be operated in Kenya and which are meant to minimize risk inherent in the agency banking system by providing a clear regulatory framework. More than ever before there is a global consensus to avail financial products to previously ignored areas due to long held views that such areas were considered economically unviable where financial institutions operate from. There is a growing need to avail and promote technological innovation and advances to such areas and to systematically expand financial systems. This effort to bring all far-flung areas have led to major financial institutions adopting agency banking. The main aim of this study is to investigate challenges faced by Co-operative Bank of Kenya in implementation of its Agency Banking as a competitive strategy in Kenya. The study reviewed other studies on strategic management, competitive strategy, strategy implementation and finally competitive strategy implementation challenges. Challenges that occur during the implementation process of competitive strategies are an important area of research because even the best strategies would be ineffective if not well implemented. This particular study was conducted through a case study and it is considered suitable as it allows an in depth study of the subject. The study used primary data collected from key informants through interviews and it involved top level management of the organization. The data was qualitative in nature and therefore, content analysis was used to analyze the data. It was clear from the study that strategic responses to implementation of agency banking as a competitive strategy in the market included provision of high quality customer service, providing high quality service and use of latest mobile telephony services. The researcher concluded that the strategies adopted by Coop Bank in response to changes in the market place were offering high quality services, providing superior customer services to the market and the use of latest technology. The study provides useful information for decision making to the various stakeholders in policy, theory and practice. It will help the management of COOP bank in understanding the challenges to the implementation of its competitive strategies and possible solutions to those challenges. The CBK will also find the study useful in guiding formulations and review of policies in the industry that will affect Agency banking in Kenya.