factors influencing the adoption of agent banking by commercial banks in kenya by elizabeth

117 Pages·2016·1.14 MB·English

FACTORS INFLUENCING THE ADOPTION OF AGENT
BANKING BY COMMERCIAL BANKS IN KENYA

BY

ELIZABETH MUNGAI

UNITED STATES INTERNATIONAL UNIVERSITY

SUMMER 2016
FACTORS INFLUENCING THE ADOPTION OF AGENT
BANKING BY COMMERCIAL BANKS IN KENYA

BY

ELIZABETH MUNGAI

A Project Report Submitted to the Chandaria School of Business in
Partial Fulfillment of the Requirement for the Degree of Masters in
Business Administration

UNITED STATES INTERNATIONAL UNIVERSITY

SUMMER 2016
STUDENT’S DECLARATION
I, the undersigned, declare that this is my original work and has not been submitted to
any other college, institution or university other than the United States International
University for academic credit.

Signed: ________________________ Date: ___________________________
Elizabeth Mungai (634014)

This project has been presented for examination with my approval as the appointed
supervisor.

Signed: ________________________ Date:___________________________
Dr. Amos Njuguna

Signed: _______________________ Date:___________________________
Dean, Chandaria School of Business
ii
COPYRIGHT

©Copyright Elizabeth Mungai, 2016

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ABSTRACT
The purpose of this research was to determine the factors that influence the adoption
of Agent Banking in commercial banks in Kenya. It specifically investigated the
preparedness of the banking industry for the agency banking model. The research
followed the research questions. These were; to what extent do technological factors
influence the adoption of agency banking in Kenya? To what extent do resource based
factors influence the adoption of agency banking in Kenya? What are the critical
success factors for implementation of agency banking in Kenya?
The research design adopted was descriptive in nature. The population of the study
comprised of the employees of the 11 commercial banks which embraced agency
banking. A sample of 33 employees was selected from the population of all
employees. Questionnaires were used for the purpose of data collection. Statistical
Package for Social Sciences 20 (SPSS) was used to analyse data. The particular
descriptive statistics comprised of minimum, maximum, means and standard
deviation while the inferential statistics used was correlation analysis.
The study findings show that technological factors affecting the adoption of agency
banking was relative advantage or perceived usefulness. The findings implied that
technology relative advantage had a significant effect on behavioral intention to
adopt. Moreover, technology complexity had a significant effect on behavioral
intention to adopt. The study findings also divulged that technology has a significant
effect on behavioral intention to adopt. Furthermore, the results indicated that
technological experiment-ability was another factor that affected the adoption of
agency banking.
Findings also disclosed the resource based factors that affect agency banking
adoption. The results indicated that the bank had access to adequate financial
resources to adopt and implement agency banking. The results further indicated that
the relationship between the resources based factor and behavioral intention to adopt
was positive and significant. The findings implied that resources based factor had a
significant effect on behavioral intention to adopt.
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Further, results indicated that the most critical success factors were: End user training,
transfer effective agent recruitment, effective system integration, effective evaluation
of business project management, effective security and authentication management,
top management support, effective change management, effective performance
measurement while technology management, rates management, product innovation,
location and convenience and effective risks and compliances resolution were ranked
as moderately critical factors.
The study concluded that relative advantage or perceived usefulness, technology
complexity, technology compatibility and technology experimentability were the
technological factors affecting the adoption of agency banking. Following the study
findings, it was possible to conclude that the bank had access to adequate financial
resources to adopt and implement agency banking and that the bank had adequate
access to the hardware and software necessary for the adoption of agency banking.
The results led to the conclusion that the most critical success factors were end user
training, followed by effective transfer agent recruitment, effective system integration,
effective evaluation of business project management, effective security and
authentication management, top management support, effective change management,
effective performance measurement while technology management, rates
management , product innovation, location, convenience and effective risks and
compliances resolution were ranked as moderately critical factors.
The study recommends that the regulator needs to sensitize the banks about the
relative advantages of agency banking and that those banks that have not adopted
agency banking should adopt. The study recommends that banks should put in place
adequate financial resources to be able to adopt agency banking. The banks should
have adequate access to hardware and support structure software, personnel for
agency banking adoption, access for adoption and implementation of agency banking.
The bank should train their staff on agency banking, encourage the participation of
intended users or employees during the adoption of and implementation of agency
banking and the commitment of top leaders.
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ACKNOWLEDGEMENT
I am grateful to God for through Him this study has been possible.
I feel greatly indebted to my supervisor, Amos Njuguna, for his guidance, inspiring
feedback and observations. I sincerely appreciate the efforts and contribution of Chris
Cheruiyot, Head Alternative Banking Channels of Co-operative bank who introduced
me to the wider subject on Agency Banking. Special appreciation goes to all the bank
officials who assisted me during data collection.
This research project would not have been accomplished without the support and
facilitation by the USIU library and computer lab staff. I am also grateful for the
moral support and inspiration and encouragement provided by my work colleagues
during the course of my study and research work.
May the Almighty God you for the support and contributions.
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DEDICATION

To

My dear husband and best friend Muasa Mulandi

And to

My sister Jacqueline Mungai as well as my colleagues Donald Chepkutwo, and Brian
Munoru.

For their love, prayers and support during my pursuit of higher education and career
development.

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TABLE OF CONTENTS
STUDENT’S DECLARATION .................................................................................. ii
COPYRIGHT ............................................................................................................. iii
ABSTRACT ................................................................................................................. iv
ACKNOWLEDGEMENT .......................................................................................... vi
DEDICATION............................................................................................................ vii
TABLE OF CONTENTS ........................................................................................ viii
LIST OF TABLES ...................................................................................................... xi
LIST OF FIGURES ................................................................................................. xiii
LIST OF ABBREVIATIONS .................................................................................. xiv
CHAPTER ONE .......................................................................................................... 1
INTRODUCTION........................................................................................................ 1
1.1 Background of the Study ............................................................................... 1
1.2 Statement of the Problem ............................................................................... 6
1.3 Purpose of the Study ...................................................................................... 7
1.4 Research Questions ........................................................................................ 7
1.5 Significance of the study ................................................................................ 8
1.6 Scope of Study ............................................................................................... 9
1.7 Definitions of Terms ...................................................................................... 9
1.8 Chapter Summary ........................................................................................ 10
CHAPTER TWO ....................................................................................................... 11
2.0 LITERATURE REVIEW ............................................................................ 11
2. 1 Introduction .................................................................................................. 11
2.2 Technological Factors Influence the Adoption of Agency Banking ........... 11
2.3 Resource Based Factors Influence the Adoption of Agency banking ............. 20
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2.4 Critical Success Factors in Agency Banking Implementation ........................... 24
2.5 Chapter Summary ........................................................................................ 33
CHAPTER THREE ................................................................................................... 35
3.0 Research Methodology ................................................................................ 35
3.1 Introduction .................................................................................................. 35
3.2 Research Design ............................................................................................. 35
3.3 Population and Sampling Design ....................................................................... 35
3.4 Data Collection Methods ............................................................................. 38
3.5 Pilot Test ...................................................................................................... 38
3.6 Research Procedure ...................................................................................... 39
3.7 Data Analysis Methods ................................................................................ 39
3.7 Chapter Summary ........................................................................................ 40
CHAPTER FOUR ...................................................................................................... 41
4.0 Results and Findings .................................................................................... 41
4.1 Introduction .................................................................................................. 41
4.2 General Information ..................................................................................... 41
4.3 Technological Factors That Affect Agency Banking Adoption .................. 43
4.4 Resources Based Factor ..................................................................................... 56
4.5 Critical Success Factors Affecting Agency Banking ......................................... 61
4.6 Chapter Summary ........................................................................................ 69
CHAPTER FIVE ....................................................................................................... 70
5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS ............. 70
5.1 Introduction .................................................................................................. 70
5.2 Summary ...................................................................................................... 70
5.3 Discussion .................................................................................................... 73
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