STRATEGIC OPTIONS ADOPTED IN AGENCY BANKING AND THEIR INFLUENCE ON PERFORMANCE: A SURVEY OF COMMERCIAL

Agency banking has been touted as a viable strategy by most commercial banks in many countries as a necessary tool for bridging the financial reach of the poor in rural and developing countries and improving income for the banks. However, the strategic options adopted by the banks to get a competitive advantage over their competitors in agency banking segment and their real effects on performance still remain unclear. Thus, investigates the strategic options adopted by commercial banks in agency banking and their influence on performance among commercial banks in Mombasa County, Kenya. Utilizing a sample size of 102 agency outlet operators of 3 commercial banks in Mombasa- Kenya, the study establishes that commercial banks differentiate their agency banking products/services with respect to pricing, remuneration structure for their agents and customer service quality. Thus, at p<0.05, product/service pricing, remuneration structure and customer service quality were positive correlates of performance of agency banking with correlation coefficients of r=0.71, r=378, r=0.309 and r=0.277 respectively. Volume agency banking transactions can therefore be generated through lowering transaction costs, attractive commissions for agent outlet operators and superior customer service quality