Sidian seeking partners for its agency banking rollout in November

 

Mr Titus Karanja, Sidian’s chief executive. PHOTO | FILE 

By MUGAMBI MUTEGI

In Summary

• Sidian Bank has since April been piloting the service in towns like Nairobi and Kitale ahead of the national rollout.

Sidian Bank has begun recruiting partners for its agency banking service to be launched in November, joining the long list of Kenyan lenders who have adopted the model.

The tier-three lender, which is majority-owned by Centum Investments, has since April been piloting the service in towns like Nairobi and Kitale ahead of the national rollout.

Titus Karanja, Sidian’s chief executive, said the bank’s target is to sign up approximately 3,000 agents by July next year as part of their efforts to take services closer to their customers.

“We have fully tested the platform. We are in the process of aggressively recruiting agents in order to hit a critical number before launch,” Mr Karanja said in an interview with the Business Daily.

“We did the piloting in a geographic test group so that even our employees across the country interact with the products. By November, we shall be ready to launch.”

Under agency banking, financial institutions contract third parties to offer some of their services such as account opening, balance enquiries, cash deposits and withdrawals.

Banks like KCB, Equity, and Co-operative Bank among others, have taken up the model to boost efficiency resulting from savings associated with fixed costs of opening and maintaining a new branch.

The lenders contract businesses such as supermarkets, pharmacies, couriers, hardware shops and post offices as third-party agents to banking services on their behalf.

Mid-sized banks, which largely target corporate customers such as the Commercial Bank of Africa, NIC Bank and Chase Bank signed with Post Bank which has more than 100 branches across the country.

“We want to give our customers as many touchpoints as possible,” said Mr Karanja. “Industry statistics have proved that agency banking is one of the best ways of mobilising deposits. It is also a low-cost channel to roll out and therefore it makes a lot of financial sense in terms of return on investment.”

The Central Bank of Kenya (CBK) said 17 commercial banks had contracted 40,224 agents as at end of March and they had transacted Sh176.7 billion through 55.8 million transactions during the period.

Since the model’s launch in May 2010, 170.5 million cumulative transactions have facilitated transactions valued at Sh930.2 billion.

“This was mainly due to increased confidence and acceptability of the agency banking model by banks and the public as an economical, convenient delivery channel,” the regulator said.

Tier-one lender Equity Bank has said its agents are conducting more than half of its transactions, being more than the number being done by ATMs and branch tellers combined.