Co-op places agents inside banking halls as model stepped up

A Co-op Bank banking hall: The lender has embarked on a service transformation to achieve a staff ratio of 70:30 for back and front office. PHOTO | FILE 

By CHARLES MWANIKI and SIMON CIURI

In Summary

• The move is likely to see the lender further cut costs by eventually reducing the staff required to run front office operations.
• Co-op Bank began rolling out the in-branch agent scheme last September at selected branches, and is targeting to have covered all branches by June.
• It rode on cost-cutting and growth of non-funded income to post a 37 per cent rise in net profit to Sh8.6 billion for the nine-month period ended September 2015.

Co-operative Bank has become the first lender to station agents inside branches in a bid to eventually woo customers from its banking halls and lure them to use alternative banking channels.

The move is likely to see the lender further cut costs by eventually reducing the staff required to run front office operations, and comes in the wake of the laying off of 160 middle level managers starting 2014 in a restructuring programme midwifed by McKinsey & Co.

Co-op Bank began rolling out the in-branch agent scheme last September at selected branches, and is targeting to have covered all branches by June this year.

The agents are paid the same commission for transactions done both inside and outside the bank branch.  

Under the project dubbed ‘branch transformation and channels migration,’ the bank is stationing up to three agents in its banking halls to serve customers instead of the traditional tellers, tasking them with informing customers about agency banking and other out-of-branch products such as mobile money.

“We have migrated over 70 per cent of previous branch transactions to alternative channels, improving convenience for customers while reducing bank operation costs,” said Co-operative Bank in an email reply to the Business Daily queries.

“For branches that have already undergone the service transformation, in-branch agents have been withdrawn for the reason that customers using those branches have substantially migrated their transactions to agent outlets away from the branch.”

Co-op Bank said that at least 30 per cent of its 5.7 million account-holders are now using more than one bank product as a result of the drive, which it says is a transition measure ahead of full branch transformation later in the year.

The lender added that it has 2.5 million customers signed up to its M-Co-op Cash mobile banking app which allows customers to open accounts, apply for loans, make utility payments and withdraw cash using cell phones.

It rode on cost-cutting and growth of non-funded income to post a 37 per cent rise in net profit to Sh8.6 billion for the nine-month period ended September 2015.

READ: Co-operative Bank gets Sh10.7bn for long-term lending

Co-op Bank managing director Gideon Muriuki said staff costs dropped 7.2 per cent to 5.9 billion in the period under review.

The bank is targeting a back office to front office staff ratio of 70 to 30 at the end of the project.

Banks have been seeking to transit from the traditional teller method as they look to lock in customers who are increasingly unwilling to travel and queue for long in banking halls, as well as take advantage of the cost savings of using agents and mobile banking.

Standard Chartered pioneered the unmanned branch in 2013, opening a unit at the Junction Mall in Nairobi fitted with iPads, personal computers, touch screens mounted on walls, and free Internet which allows customers to transact on their own.