OPPORTUNITIES AND CHALLENGES OF AGENT BANKING THE CASE OF SELECTED COMMERCIAL BANKS IN ETHIOPIA

Abstract

Agent banking is a form of branchless banking which allows people to access bank accounts, making deposit, withdraw, and transfer funds, pay their bills, inquire about an account balance, or receive government benefits or a direct deposit from their employer. Banking agents can be pharmacies, supermarkets, convenience stores, lottery outlets, post offices and many more and retail outlets of merchants, by using a mobile phone device. To this end, many more agent banking platform vendors have been emerged due to the opportunities of the service since it is found a new and profitable business worldwide. Ethiopia has recently endeavored to launch mobile and agent banking service through NBE under Directive No. FIS/01/2012. In this regard, banks play a leading role in the adoption and implementation of the service. Therefore, the purpose of this research is to assess the current practice, opportunities and challenges of the agent banking service in Ethiopian banking sector. To this end, four commercial banks were selected through purposive sampling based on the year they commence and exercise agent banking service. Thus, the study adopted descriptive research methods by utilizing survey approach form that the data obtained from primary and secondary source through structured questionnaire and semi- structured interview from the concerned respondents and the data was analyzed using SPSS software. Accordingly, the finding confirms that, despite the significant progress registered, the implementation and delivery of agent banking service in Ethiopian banking sector was unsatisfactory due to lack of attention and support of commercial banks, the level of managerial skills, financial networks among banks, telecom network and internet access and awareness creation among the society. It is recommended that commercial banks should facilitate continuous training and awareness creation, enhancement of telecom service and collaboration of institutions to have a technological linkage among them.