Influence of access to agent banking services on rural communities in Kenya: a case of Ololung’a division, Narok County

Abstract

The agent banking model is one in which banks provide financial services through non bank agents, such as grocery stores, retail outlets, post offices, pharmacies, or lottery outlets. Agent banking is quickly becoming recognized as a viable strategy in many countries for extending formal financial services into poor and rural areas. The agency banking in Kenya guidelines were enacted in 2010. Banks must first apply to central bank of Kenya to get approval to conduct agency banking business. The general Objective of the study was to establish the influence of agent banking services on rural communities in Kenya with reference to Ololung’a Division, Narok County. This study was guided by the following specific objectives, To investigate the impact of agent banking services on rural communities. To examine how agent banking influences liquidity on rural communities. To determine the accessibility of agent banking providers on rural communities. The researcher employed descriptive design. Descriptive design sought to uncover the nature of factors involved in a given situation, the degree in which it existed and the relationship between them. The study population constituted Agents from Cooperative Bank 102, Equity Bank 133, Kenya Commercial bank 152 and Post Bank 113. The target population of the study was 850 respondents, the study adopted fisher’s model of sample selection and acquired a sample size of 384 respondents. The study used simple random sampling technique to draw a sample from the study population. Data collection was from two main sources; primary and secondary. Secondary sources included relevant documents and reports. The semi –structured questionnaire and structured questionnaire were the main instrument of the study administered to the respondents. It involved both qualitative and quantitative approaches. Open and closed ended questionnaires were administered, this was because Close ended questionnaires were easier to analyze since they were in an immediate usable form and again each item was followed by alternative answers. Interview Guides were used to generate information from the respondents. The researcher conducted a face to face interview with key respondents to the study. The study’s major conclusion was that customers must be supported in making there first transactions before they are able to transact independently. The study concluded that there was need to adopt an integrated payment system that was user friendly as a critical component of financial inclusion. The studies main recommendation was that, there was need to adopt an integrated payment system that was user friendly as a critical component of financial inclusion. The study further recommended that there was need to facilitate more Agent banking in rural areas in order to improve the economy and equally increase financial inclusion. The suggestions for future researchers should investigate the effect of Agent banking retail points as avenues that can offer saving services