Peace Chemutai2023-09-202023-09-202023-09-13https://hdl.handle.net/20.500.12311/1059This is a dissertation.The study analyzed the effects of agency banking on the financial performance of commercial banks in the study context. The study determined the effect of agency banking on customer transaction on a banking services, on deposit growth and on cost reduction in the study context. The study used a cross-section survey design and the study focused on Equity Bank. The population of the study was 55 respondents and the sample size was 48 although actual participants were 40. The study used both qualitative and quantitative research approaches for data collection. The study established that agency banking had a positive influence on customer growth. Both the middle managers and agents agreed that agency banking had an impact on financial inclusion especially because of its convenience and ease of use. Agency banking has greatly increased the level of financial inclusion. It has enhanced efficiency by availing services to customers at lower costs. By so doing, banks have been able to increase customer outreach thereby increasing customer growth. On deposit growth, most banks have a free transaction cost policy for deposits. This has encouraged customers with huge cash flows to deposit their money at agents at no costs. This therefore signifies a positive influence of agency banking on deposit growth. On cost reduction, agency banking has significantly reduced the costs it would take to build the brick and motor institutions. Agents are often pharmacies, general shops, and even kiosks that are in operation. They then offer financial services to customers. Operational costs are however slightly higher and in turn increase transaction costs. Since the premises are not owned by the bank, the other costs related to the agency banking are borne by the agents and not the bank. Thus reducing the overall costs of availing financial services in general. The study concluded that majority of the population is no longer ignorant about financial services due to the presence of agents in rural and semi-rural areas. The agents have been equipped with tools and the knowledge of bank products and have significantly led to the increase in customer awareness and ultimately the growth of customers for their respective banks. The study therefore recommends that customer care needs to be improved as services are being relayed to customers. The study recommends increased awareness of the service offerings as well as reduced charges for cash deposits so as to increase the volume of transactions being carried out via agents. This study recommends the streamlining of operational costs involved in providing financial services.enDissertation