Kenya records 5.7% growth of banking agents

The delivery of banking services via the agent model in the country has increased as more Kenyans are demanding services within their localities.

By the end of 2023, there was a notable increase of 5.6 per cent of banking agents in commercial banks.

According to the latest 2023 Banking Supervision Report by the Central Bank, over 90 per cent of the approved bank agents were shared across 3 major banks in Kenya with physical branch presence, while over 90 per cent of the microfinance banks (MFBs) agents were contracted by the two largest MFBs.

CBK states that during the year, 16 commercial banks contracted 87,531 agents, while 5 MFBs contracted 677 bank agents.

As of December 2023, commercial banks recorded 82,780 bank agents, while MFBs agents were 921.

Despite these increases, the number of transactions these agents processed declined by 8.3 per cent to 145.3 million in December 2023 from about 158.4 million transactions recorded in 2022.

"In 2023, the value of banking transactions undertaken through agents decreased from Sh1.8 trillion (USD 15.2 billion) in December 2023 to Sh1.7 trillion (USD 10.5 billion) in December 2023," CBK reveals.

CBK attributed the decrease in agent transactions to new alternatives for conducting business, stating that "the decrease was attributed to the increased use of mobile money and internet banking."

The report showed an overall decrease in total transactions due to decreased transactions relating to cash deposits, cash withdrawals, and payment of bills.

Customer deposits decreased by 6.8 per cent from Sh5.0 trillion in December 2022 to Sh5.9 trillion in December 2023. The decline was due to deposit mobilisation through agency banking and mobile phone platforms.

However, these agencies are increasingly handling the payment of retirement and social benefits. In 2023, they processed more than 2 million transactions, a 116 per cent increase from December 2022.

The expansion of banking agencies and digital banking in the banking industry has affected the number of automated teller machines (ATMs). There was a 19 per cent decrease in ATM booths in the country, from 2301 in December 2022 to 2282 in December 2023.