Union unimpressed by Co-op’s model of placing agents inside banking halls

Tom Odero, organising secretary Banking Insurance and Finance Union of Kenya. PHOTO | FILE 

By CHARLES MWANIKI, cmwaniki@ke.nationmedia.co

In Summary

• The bankers' union says the positioning of agents inside Co-op Bank branches contravenes the collective agreement between banks and the union.
• The union is keen to investigate whether the move to place agents in banking halls will directly lead to job losses among tellers and may take legal action if that is the case.

The bankers’ union has opposed agents transacting business inside banking halls and hinted that other banks are looking at copying the model adopted by Co-operative Bank.
The Banking Insurance and Finance Union of Kenya (Bifu) says the positioning of agents inside Co-op Bank branches contravenes the collective agreement between banks and the union.

Organising secretary Tom Odero said the union is keen to investigate whether the move to place agents in banking halls will directly lead to job losses among tellers and may take legal action if that is the case.

Co-op in September last year became the first lender to station agents inside its branches in what it hopes will eventually woo customers from banking halls and encourage them to use alternative channels such as the agents and mobile banking.

“It is not just bad labour practice but it also goes against our agreement that a bank can only outsource non-core labour, which is not replacement of tellers. We will look around because we have heard that there are also other banks looking to introduce agency employment,” said Mr Odero.

A Co-op Bank official declined to comment and instead referred the issue to Kenya Bankers Association that negotiates with the union on labour issues.

The association’s spokesman could not be reached on Thursday.

The move by Co-op is likely to help the lender further cut costs by eventually reducing the staff required to run front office operations, with the bank targeting a back office-to-front office staff ratio of 70 to 30 at the end of the project.

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

Co-operative Bank laid off 160 middle level managers starting 2014 in a restructuring programme advised by McKinsey & Co, a key factor in the lender’s impressive profit growth.

The bank began rolling out the in-branch agent scheme last September at selected branches, and is targeting to have covered all branches by June.

With over 8,500 agents countrywide, Co-op has indicated that the agents in banking halls will be withdrawn once customers using those branches have substantially migrated transactions to agent outlets.

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

Bifu, which represents some 8,000 members, was last year involved in a labour dispute with banks over terms and conditions, which was resolved when the two parties signed a collective bargaining agreement raising employees pay and other employment terms for the next two years.

Banks have been keen to cut costs as they seek to grow their margins in a competitive industry.

The Kenyan banks have also replicated the agency model in regional branches. Subsidiaries of multinationals have, however, sat on the sidelines even as the model raises hundreds of billions in cheap deposits.