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Philip Okoth Tindi - Master of Business Administration (Finance Option), Jomo Kenyatta University of Agriculture and Technology, Kenya

Dr. Jared Bitange Bogonko - Lecturer, Department of Business, Jomo Kenyatta University of Agriculture and Technology, Kenya


The main objective of the study was to determine the effects of agency banking on customer satisfaction in the banking industry. To attain this objective, the study was guided by the following specific objectives; to determine how convenience of agency banking affects customer satisfaction, to evaluate how agent quality influences customer satisfaction, and to establish the effect of reliability on customer satisfaction. Players in the financial institution sector will find the study useful as they can use the findings to strategize on how they can mutually benefit from this development as opposed to being competitors of the same market segment. The study was carried out in selected financial institutions offering agency banking in Eldoret town. This study was based on the agency theory that seeks to explain the relationship between the principal and agent in business. A descriptive research design was adopted for this study. The population of study consisted of the agency banking customers of 9 selected banks offering agency banking. The study used a sample of 297 agency banking dealers. Primary data was collected for this study by use of questionnaires. Validation was done through careful examination of the content after a pilot study. The researcher ensured that all objectives were adequately covered by cross checking the objectives and corresponding items. Data was analyzed using qualitative and quantitative methods. The processed data was summarized and presented in form of frequency distribution tables. A regression equation of Y = 26.123 +0.227X1 + 0.012X2 +0.118X3 was found with P-values less than 0.05 (P<0.05) thus the study revealed that convenience of agency banking affects customer satisfaction in commercial banks to a great extent, it was revealed that agent quality has a positive influence on customer satisfaction in commercial banks and reliability has a positive influence on customer satisfaction in commercial banks. Agents prior experience with the bank customers is positively related to satisfaction and time spent in agency banking is low compared to the normal banking and also the cost involved in transacting in agency banking was low compared to the banking hall. Innovation affects customer satisfaction in commercial banks. Technology innovations, product innovations, market innovations as well as process innovations affect the financial performance of the Banks. Based on the above findings, the study therefore recommends provision of sufficient information to agency customers to make informed decisions regarding borrowings and investments. The researcher suggests further studies to be carried in the following area to compliment and supplement the current study: The role of information communication technology on operations of agency banking.

Full Length Research (PDF Format)