CITATION: Osano., H .& Mwangi, M.(2015) Effect of Agency Banking On the Performance of Commercial Banks in Kenya: Case of Machakos County, Kenya. International Journal of Strategic Management and current business studies 4 (11) 32-60.

ABSTRACT

Technological advancements has not only affected the way of living but has had an effect on the way people do their banking. Technology has therefore created greater opportunities to service providers to offer great flexibility to customers. Agency banking involves the use of a number of information technologies. This study utilized a descriptive survey. The population of the study was 5 Commercial Banks offering agency banking in Machakos County, where the respondents of the study were the employees of the respective banks and the agents operating the outlets. The sample of the study was 150 respondents where 115 were the employees of the respective banks and 35 the agents. Primary data was collected by administering a semi-structured questionnaire and an interview. Quantitative data was gathered and the information was presented through the use of bar charts, graphs and pie charts. Content analysis was applied to test qualitative data. The study revealed that agency banking regulations negatively affects performance of commercial banks in Kenya. The study established that agency banking staff skills and competencies positively affects performance of commercial banks in Kenya. The study found that marketing strategies used in agency banking positively affects the performance of commercial banks in Kenya. The study revealed that agency banking monitoring and evaluation positively affected performance of commercial banks in Kenya. The findings of this study will help other financial institutions to understand the effects of agency banking on commercial banks performance as well as attain the goal of financial Inclusion. The study recommends that the banking institutions should consider intensifying the agency banking network as this will ensure financial inclusion

Key words: Agency banking regulations, marketing strategies, skills and competencies, monitoring and evaluation, performance of commercial banks.