Abstract:
The study about agent banking and its benefits to involved Financial Stakeholders was conducted in the banking Sector, comprised of two objectives: explore the process for adoption of agent banking for the creation of a financial system: A case of BK and Equity Bank Rwanda; and identify the benefits of agent banking as a financial system for financial stakeholders, including agents and commercial banks, central bank, Access to Finance Rwanda and customers. The agent banking is designed to help commercial banks increase their outreach without incurring additional costs of setting up physical branches. This study used an exploratory case study research design and sample size of 26 respondents. Data were collected using interviews and analyzed using content analysis. The study identified the process of adoption of agent banking as a financial system and benefits to involved financial stakeholders banking to follow the proposed steps. This study found that agent banking adoption process starts with Central bank issuing agent banking guidelines and Commercial banks apply to obtain prior written approval of the Central bank. In this process, commercial banks invite interested agents to apply seeking permission to provide financial services on their behalf. Technological devices such as mobile phone and POS machines and computer machines are used in the process to provide the financial services after signing the contract between a commercial bank and an agent. It benefits Central bank and Access to Finance Rwanda in terms of promoting financial inclusion; increasing the market share and market penetration especially in remote areas for commercial banks. Agents benefit from it, in terms of commission received for agents and customers get convenient access to bank services, for customers. The study concluded that, agent banking that should be adopted by all the commercial banks in order to speed up the promotion of financial inclusion in Rwanda. It therefore recommended that the central bank should provide online approval to easy the process. Commercial banks should keep increasing the number of agents to reach potential customers in banked locations. They should also adopt other technological devices to provide agent banking services and offer micro loans via agents. Increase the threshold of cash in and cash out transactions an agent cash effect.
