Orals East Africa>Banks are changing corner shops business model At the hut of the story

Written by Oral East Africa

In rural Kenya the shopkeeper is more than just a collection of retail essentials, it serves as a landmark, often gives the area its name and lately has almost become an entire bank.

Kenyan banks are converting the little rural corner shops into full-fledged financial service centers allowing parents to pay school fees, settle bill payments and even make account inquiries.

Agency Banking in Kenya has exploded since inception in the year 2010 to over 183 million transactions valued at over Ksh1.7 trillion ($10.5 billion) in December 2023.

Nairobi where 15 branches were opened last year, as much as the branches opened in the next ten counties.

Across the country over 260,000 shops work as financial services agents with half of them garbed in monopolistic green of the giant telco Safaricom.

Banks control the rest led by Equity Bank’s 40,211 agents, KCB Bank Kenya Limited with 24,055 agents and Cooperative Bank of Kenya Limited with 15,519 agents according to the Central Bank of Kenya 2023 Annual report.

Demystify banking

Now Absa Bank has joined the club of lenders scaling this model after it announced plans to recruit 17,000 agents to expand its network.

Speaking during the launch of this strategy that will see the Bank increase its agency network from the current 600 to over 3000 in the first phase, Absa Bank Kenya Managing Director and CEO, Abdi Mohamed, said shopkeepers demystify banking allowing banks to come closer to customers in a more neighborly way.

“As we embrace the evolving landscape, the agency network is a critical piece of how we serve our customers, and we are keen on it. Our footprint will continue to grow over time, and we are focused on demystifying banking for all,” said Mr Mohamed. He said the model is also empowering individuals and businesses to thrive and contribute to the growth of Kenya’s economy by facilitating essential financial services in underserved areas

Bank branches

While Kenya has a high level of financial inclusion over digital channels, rural areas are still underserved by the boutique options offered by a physical bank.

The country has 1511 bank branches a third of which are found at the capital with the rest spread unevenly across the 47 counties mostly in provincial towns.

Rural Kenya remains largely unbanked with many civil servants and businesses men in middle-income neighborhoods often have to travel a distance to pay for their school fees.