Factors Influencing the Adoption of Agent Banking By Commercial Banks in Kenya

Abstract

The purpose of this research was to determine the factors that influence the adoption of Agent Banking in commercial banks in Kenya. It specifically investigated the preparedness of the banking industry for the agency banking model. The research followed the research questions. These were; to what extent do technological factors influence the adoption of agency banking in Kenya? To what extent do resource based factors influence the adoption of agency banking in Kenya? What are the critical success factors for implementation of agency banking in Kenya? The research design adopted was descriptive in nature. The population of the study comprised of the employees of the 11 commercial banks which embraced agency banking. A sample of 33 employees was selected from the population of all employees. Questionnaires were used for the purpose of data collection. Statistical Package for Social Sciences 20 (SPSS) was used to analyse data. The particular descriptive statistics comprised of minimum, maximum, means and standard deviation while the inferential statistics used was correlation analysis. The study findings show that technological factors affecting the adoption of agency banking was relative advantage or perceived usefulness. The findings implied that technology relative advantage had a significant effect on behavioral intention to adopt. Moreover, technology complexity had a significant effect on behavioral intention to adopt. The study findings also divulged that technology has a significant effect on behavioral intention to adopt. Furthermore, the results indicated that technological experiment-ability was another factor that affected the adoption of agency banking. Findings also disclosed the resource based factors that affect agency banking adoption. The results indicated that the bank had access to adequate financial resources to adopt and implement agency banking. The results further indicated that the relationship between the resources based factor and behavioral intention to adopt was positive and significant. The findings implied that resources based factor had a significant effect on behavioral intention to adopt. Further, results indicated that the most critical success factors were: End user training, transfer effective agent recruitment, effective system integration, effective evaluation of business project management, effective security and authentication management, top management support, effective change management, effective performance measurement while technology management, rates management, product innovation, location and convenience and effective risks and compliances resolution were ranked as moderately critical factors. The study concluded that relative advantage or perceived usefulness, technology complexity, technology compatibility and technology experimentability were the technological factors affecting the adoption of agency banking. Following the study findings, it was possible to conclude that the bank had access to adequate financial resources to adopt and implement agency banking and that the bank had adequate access to the hardware and software necessary for the adoption of agency banking. The results led to the conclusion that the most critical success factors were end user training, followed by effective transfer agent recruitment, effective system integration, effective evaluation of business project management, effective security and authentication management, top management support, effective change management, effective performance measurement while technology management, rates management , product innovation, location, convenience and effective risks and compliances resolution were ranked as moderately critical factors. The study recommends that the regulator needs to sensitize the banks about the relative advantages of agency banking and that those banks that have not adopted agency banking should adopt. The study recommends that banks should put in place adequate financial resources to be able to adopt agency banking. The banks should have adequate access to hardware and support structure software, personnel for agency banking adoption, access for adoption and implementation of agency banking. The bank should train their staff on agency banking, encourage the participation of intended users or employees during the adoption of and implementation of agency banking and the commitment of top leaders.