https://www.inosr.

net/inosr-humanities-and-social-sciences/
Nyambane and Munyengabe
INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023
©INOSR PUBLICATIONS
International Network Organization for Scientific Research ISSN: 2705-1684
https://doi.org/10.59298/INOSRHSS/2023/6.5.4000

Agency Banking and Accessibility to Financial Services of Commercial

Banks in the Northern Province of Rwanda
1
David Nyambane and 2Munyengabe Albert
1
Faculty of Business and Management, Kampala International University, Western
Campus, Uganda.
2
Faculty of Business Administration (Finance and Accounting) of Mount Kenya University
Kenya.

ABSTRACT
This research project was on assessing the effects of agency banking on accessibility to
financial services in commercial banks in the Northern Province of Rwanda. The study
adopted a descriptive research design. The population was 555 agents under which sample
size was 233 people found using the Yamae formula. The study used a stratified and simple
random sampling method. Also, different research instruments of data collection were used
which include: journals, articles, document analysis and questionnaires. The reliability of
the study was tested by carrying out pilot research and found that Cronbach's Alpha of .831.
The data was analyzed using SPSS version 21 and data was presented using tables,
percentages, means, and standard deviations. To analyze the relationship between two
variables, Pearson Chi-Square and Pearson correlation were used to come up with
comprehensive results. It was clear from the study that strategic responses to the
implementation of agency banking as a competitive strategy in enhancing customers’ access
to financial services included the provision of high-quality customer service, enhancing the
operational structure and improving the brand image. The study established that operational
structure, brand image and financial services awareness among the rural population are
positively correlated (r = 0.805) with access to financial services. Access to financial services
was greatly enhanced by strategically increasing the proximity of agency banking services,
increasing the number of services that could be offered through agency banking and
increasing awareness among the population on financial services available at agency banking
outlets.
Keywords: Agency banking, Financial Services, Commercial banks, Customers, Rural
population.

INTRODUCTION
Agency banking is one in which banks particularly true in rural and poor areas
provide financial services through where as a result a high percentage of
nonbank agents, such as grocery stores, people are unbanked. Agency banking is
retail outlets, post offices, pharmacies, or quickly becoming recognized as a viable
lottery outlets. Agency banking takes strategy in many countries for extending
customers out of the bank halls to kiosks formal financial services into poor and
and villages. Investors have pumped rural areas in that agency banking enables
billions into new platforms that offer clients to store, send and receive
agency banking services. This model electronic money through local agents,
allows banks to expand services into areas rather than travelling to the nearest bank
where they do not have sufficient capacity branch [1]. Agency banking has been
to establish a formal branch, which is adopted and implemented with varying

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Nyambane and Munyengabe
INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023
degrees of success by several developing Identification of customers is normally
countries, particularly in Latin America. done through a PIN, but could also involve
Brazil is often recognized as a global biometrics. About the transaction
pioneer in this area since it was an early verification, authorization, and settlement
adopter of the model and over the years platform, banking agents are similar to any
has developed a mature network of agency other remote bank channel. By December
banks covering more than 99% of the 2015, Equity Bank Rwanda had a total of
country’s municipalities. Other countries 1016 agents in operation [6]. Agency
in Latin America have followed suit, banking minimizes fixed costs by
including Mexico, Peru, Colombia, leveraging existing retail outlets and
Ecuador, Venezuela, Argentina and Bolivia stores hence financial service providers do
[2]. In Africa and Asia continents, the not need to invest in their physical
countries that have utilized the agency infrastructure also by using mobile phones
banking model to expand financial rather than POS terminals as technology
services include Pakistan, the Philippines, platforms, financial service providers do
Kenya, South Africa, Uganda, and India. not even have to incur equipment costs,
The regulation, design, and for each new retail outlet opened. Such a
implementation of agency banking vary variable cost structure makes the agent's
across countries [3]. The partnership has economics very simple [7].
helped banks to take financial services Agency banking has become one of the
closer to people and, more importantly, to essential services i n the banking sector in
areas that lack them. Kenya being the bringing their services closer to the people
pioneer of agency banking in Africa who are in remote areas where brick-and-
changed its banking laws in January 2010, mortar branches are not present. To move
to allow commercial banks to offer their closer and access many customers,
services through third-party businesses. commercial banks started to allow other
The agents operate as satellite branches. commercial outlets like shops and
The banking concept that is deepening supermarkets to act in their capacity as
access to financial services is gaining formal banks and this was formally
currency in Kenya, where one-third of the launched by the National Bank of Rwanda
population still lacks access to formal about five years ago. According to [8],
banking services [4]. In Rwanda, agency there will be significant growth in retail
banking was introduced in 2012, with deposits amongst commercial banks that
Equity Bank being the pioneer. Other banks have embraced agency banking. [9]
such as KCB, BK, and COGE Bank have conducted a study on the effects of agency
followed suit. These banks have embarked banking on access to financial services in
on an important reform to expand banking commercial banks in Kenya, the study
services to millions of poor households by found that agency banking should be given
enabling third-party retail agents as a low- attention to security measures. A few
cost distribution alternative to branches. studies have been conducted on the
These agents are increasingly utilized as impact of agency banking on the financial
important distribution channels for services of commercial banks in Rwanda.
financial institutions. Banking agents are [10] studied the effect of agency banking
usually equipped with a combination of on financial inclusion in Kenya. They
POS card readers, mobile phones, barcode established that customers with large
scanners to scan bills for bill payment transactions are unlikely to transact with
transactions, PIN pads, and sometimes PCs bank agents because of security risks.
that connect with the bank’s server using Other studies that have been conducted
personal dial-up or other data connection have mainly focused on the impact of
[5]. Clients that transact at the agent use a agency banking on the operational
magnetic stripe bank card or their mobile performance of commercial banks. The few
phone to access their bank account. studies on the impact of agency banking on

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INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023
accessibility to financial services in research on the effects of agency banking
commercial banks in Rwanda that have on accessibility to financial services in
been conducted targeted individual banks commercial banks in Rwanda. Although
and were carried out before many customers have benefited a lot through
commercial banks embraced agency agency banking, it is not clear whether the
banking. Unlike the past, today it is financial services of commercial banks
common to find one agent providing have improved or not as a result of
services of at least three commercial adopting agency banking. This study will
banks at the same outlet. The current attempt to answer the following research
study therefore seeks to bridge the gap question: What are the effects of agency
between what has been previously studied banking on accessibility to financial
by other researchers by carrying out services in commercial banks in Rwanda?
METHODOLOGY
Research Design services in commercial banks in the
This study employed a descriptive Northern Province, to establish the
research design. A descriptive study is relationship between brand images of
concerned with specific predictions with agency banking and accessibility to
narration of facts and characteristics financial services in commercial banks in
concerning individual groups or situations the Northern Province, to determine the
[11, 12]. effect of agency banking on access to
Area of the study financial services in commercial banks in
The study was carried out in four selected the Northern Province.
commercial banks in the Northern Target Population
Province of Rwanda Bank of Kigali, KCB, A population is the total collection of
Coge Banque and Equity Bank. The period elements in the current study about which
of understudy was three years from 2013 the researcher makes inferences. [13]
to 2015. The areas covered were the define a population as all individuals or
Northern Province of Rwanda, particularly objects with common defining
in four districts of Musanze, Burera, characteristics. The study population was
Rulindo and Gakenke districts. These areas the operators of all bank agents’ outlets.
were chosen because in Northern Rwanda However, the target population comprised
the majority of people lived in remote 555 agents of commercial banks in the
areas where accessing bank services Northern Province of Rwanda. The agents
required them to go to towns where banks link the populations of remote areas and
had branches. The study was to analyze the mother bank in service delivery and
the effects of agency banking on ensure that the target customers get
accessibility to financial services in satisfactory services just like they would
commercial banks in the Northern be served by the staff of the bank at the
Province of Rwanda, to investigate how the retail branches. According to the annual
operational structure of agency banking report of commercial banks end year of
influences customer’s access to financial two.
Table 1: Population under study
Population category Target Population
Equity bank Rwanda 175
Bank of Kigali 130
Kenya Commercial Bank Rwanda 150
Cogebank 100
Total population 555
Source: Equity Bank Rwanda (2015); Bank of Kigali (2015); Kenya
Commercial Bank Rwanda (2015); Cogebank (2015)

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Nyambane and Munyengabe
INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023
𝑁
𝑛=
1 + 𝑁𝑒 2
Where;
n: sample size,
Sample Design N: total population,
The selection of a sample from a target e = alpha level,
population requires the construction of a i.e. e = 0.05 if the confidence interval is
sampling frame. The sampling frame is 95%.
normally made in the form of a physical The total population is 555 using a 0.95
list of population elements. confidence interval, and the sample size is:
555
Sample Size Determination 𝑛= 2 = 233 People
1+555(0.05)
According to [14] provides a simplified
formula to calculate sample sizes:

Table 1: Population under study and Sample size

Population category Target Population Sample size
Equity bank Rwanda 175 73
Bank of Kigali 130 55
Kenya Commercial Bank Rwanda 150 63
Coge bank 100 42
Total population 555 233
Source: Researcher (2016)
Sampling Technique contact with the agents and drop-and-pick
According to [11], a sample is a unit or methods. The method was chosen because
portion of the target population with it saves time and cost. Secondary data was
sufficient characteristics of the entire obtained by reading relevant publications
population. The key determinant of the of other agents in the industry.
sample size is the level of representation Data Collection Instruments
required. A high level of assurance can The main instrument that was used in the
only be derived from a relatively large collection of data for the study was the
sample and vice-versa. The researcher questionnaires that consisted of close-
used a stratified and simple random ended questions. Secondary sources
technique in selecting the respondents in including books, journals and published
which the respondents were arranged into reports were consulted to gather enough
strata that were according to different information for the subject under study.
bank agents. An important benefit of Administration of Data Collection
stratified random sampling is that it Instrument
ensures the presence of the key subgroup The researcher distributed the
within the sample. questionnaires to the respondents and
Data Collection Methods waited for them for three days. Then the
The researcher used primary and researcher made sure that the number of
secondary sources during the data questionnaires distributed had been filled
collection. According to [15], it helps to by all respondents or not. After carrying
collect accurate data to achieve useful out questionnaires with respondents, the
results, thus questioning and observation questions were edited and the information
are two basic methods of collecting data. gathered was arranged into a meaningful
The researcher used the questionnaires and organized form by coding it. For the
and documentation. Primary data was research to be more scientific and
collected using structured questionnaires meaningful, the large quantities of
served to respondents through direct information gathered were condensed,

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Nyambane and Munyengabe
INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023
hence facilitating easy analysis and presentation and interpretation of data.
processing of data, coding, tabulation and The researcher interpreted data based on
the analysis of the main findings were percentages that were obtained to show
presented in chapter four. the relationship among variables. This
Data analysis Procedure helped to identify the major direction of
According to [16] confirmed that the main information that was obtained during the
purpose of content analysis is to study research. This research used descriptive
existing information to determine factors statistics and Pearson Chi-Square to
that explain specific phenomena. To this analyze the research objectives.
extent, therefore, the responses to the Ethical Consideration
questions were interpreted and put into Ethics is a major branch of philosophy that
different specific and relevant categories. has occupied great minds for many
The data was analyzed using descriptive centuries. This study guide identified the
statistics in frequency tables. To enable core principles relevant to research with
the researcher to gain ground for human participants, who translated these
concluding, this exercise involved editing, principles into specific guidance to
tabulation, SPSS version 21, and support the researcher. The principles that
interpretation of findings. Editing was the researcher was used include but not
used to detect errors and omissions, limited to informed consent, no pressure
correct them and certify that minimum on individuals to participate, respect for
data quality standards are achieved, the individual autonomy, avoiding causing
data collected was edited to verify the harm, maintaining confidentiality and
coherence of respondents in answering the taking particular care in research with
questions and ensure that they were vulnerable groups [17]. During the process
provided reasonable predetermined of carrying out the research, the researcher
results. Tabulation was done to count the exercised academic freedom and high
respondents and make statistical moral standards in discussing the
frequency distribution and statistical findings. The researcher did not use
evaluation of data accuracy and reliability research for personal gain and the
putting the information provided by the information from respondents was treated
respondents in tables together with with confidence. Every respondent had the
corresponding ratings in terms of right to withdraw during the research
percentages. Tables were used for easy process.
RESULTS
Descriptive statistics were used to relationships between independent and
summarize the data and show response dependent variables of the study were
concentrations on the variables of the determined and explored using chi-square
study. The results were presented and and correlation analysis by conducting the
discussed accordingly in the following Pearson chi-square and Pearson
sections. Coding of the questionnaire was correlation. The researcher distributed
the first task, and then the data was 233 questionnaires to the respondents and
entered into the spreadsheet and then received 230 of them back which is 98.7%.
transferred into the SPSS Version 21 for According to [18], a 50% response rate is
analysis. Statistical tools used were adequate, 60% good and above 70% rated
frequency distribution tables, chi-square very well. This also concurs with [19]
and correlation. The findings were assertion that a response rate of 50% is
presented in the form of frequency adequate, while a response rate greater
distribution tables, percentages mean and than 72.22% is very good. This implies that
Standard Deviation. Preliminary analysis based on the assertions; the response rate
procedures of cleaning, frequencies, in this case of 98.7% is very good.
consistency checks, and correction were
done on the data obtained. The

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Nyambane and Munyengabe
INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023
Demographic Characteristics of respondent’s background. This is because
Respondents variables have different preferences tastes
The demographic variables used in this and purchasing power thus were included
case were Gender, Age group and Level of as a factor that might play a role in
education. Data was collected from people determining the relationship between
and that is why gender, age and level of Agency banking and accessibility to
education were inquired to know the financial services.

38%

62%

Male Female
Figure 1: Classification of respondents by gender

A fair number of agents from each gender that more males have ventured into the
were surveyed. Among the 230 people agency business than females this is
sampled, 61.7% were male and 38.3% were because males were more economically
female. Males in the study sample reported empowered than women; hence getting
a greater number of the agents than did money for transactions for them is easier
females in the study sample. It was evident than for their female counterparts.

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Nyambane and Munyengabe
INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023

Age group of respondents

above 40 years 24
Age group

between 31 and 40 83

between 21 and 30 97

below 20 years 26

0 20 40 60 80 100 120
Frequencies

Figure 2: Classification of respondents by age

The respondents were grouped into 40 years and 10.4% were above the age of
different age categories who participated 40 years. The age bracket between 21-30
in the survey. This type of data was years accounted for the highest
analyzed using the frequency as Table 3 percentage, followed by the age bracket
shows that among 230 people sampled, between 31-40 years, followed by the age
41.6% were between the age of 21-30 years, bracket above 40 years while the age below
and 11.2% were between the ages of 0-20 20 years accounted for the lowest
years, 35.6% were between the age of 31- percentage.

level of Education

13% 16%

31%
40%

University 37 15.9
A-level 92 39.5
O-level 73 31.4
Any other 28 12.1

Figure 3: Classification of respondents by level of education

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Nyambane and Munyengabe
INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023

Of the people surveyed, 15.8% had a any other qualification accounted for the
University qualification, 39.5% had an A- lowest percentage.
level qualification, 31.4% had an O-level Bank Agents
qualification and 12.1% had any other Four main agency banking providers in the
qualification. The A-level qualification Rwandan banking industry are used. The
accounted for the highest percentage, aim was to find out which agency banking
followed by the O-level qualification and provider is most preferred.
then the University level qualification and

Agency banking subscription by operators

100

80 90
Frequencies

60
64
40
43
20 33

0
Bank of Kigali Equity Bank KCB COGE BANK
Banks

Figure 4: Classification of respondents by agency banking subscription by operators

The participants were asked about the established and how resources are
agency banking service provider they allocated. When an organization changes
prefer and they are currently using. The its strategy, the existing organisational
data was analyzed using frequency structure may be ineffective. Agency
distribution as per Figure 4 Equity Bank banking being a new concept has forced
was ranked the highest with 39.1 % banks to realign or change some of its
potential users, BK was second with 27.8% structures to accommodate agency
users, KCB was third with 18.7% users banking, thus this study sought to find out
while Coge Bank scored the lowest how the operational structure of agency
percentage with only 14.3% users. banking influences customers’ access to
Influence of operational structure on financial services in commercial banks in
customer’s access to financial services the Northern Province of Rwanda. Table
The strategy used by an organization is 4.3 shows the level to which the
fundamentally influenced by the respondents agree or disagree with some
operational structure of the organization. of the factors.
It dictates how policies and objectives are

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Table 2: Extent to which operational structure influences customer’s access to financial

services
Variable Mean Std.

Disagree
disagree
Strongly

Strongly
deviation

Neutral

Agree

agree
F % F F % F F
% % %
Receiving the customers does not
take too long time due to good 15 7 24 86 98 3.748 1.4102
The system, e.g. deposit, 7.7 3 10.3 37 42
withdraw

The costs of opening and 22 6 23 66 113 3.817 1.29212

operating an agency is cheap 9.4 2.6 9.9 28 49.8

The amount of fees charged on

agency Service is lower 15 7 25 76 107 3.622 1.45993
compared to going to the bank 6.1 3 11 33 47.2

People use agency services to

avoid movement costs to the 17 23 23 83 98 3.587 1.41693
main bank branch 7.1 3.9 9.9 37 42.1

People make payments through 21 9 22 66 112 3.791 1.31498

agency services such as school, 9.3 3.9 9.4 28 49.4
electricity bills, water bills
(Source: field survey, 2016)

The study sought to determine the extent by mean of 3.748 and standard deviation
to which operational structure Influence of 1.4102. On the question of whether the
customer’s access to financial services was costs of opening and operating an agency
assessed by asking the respondents to are cheap. From the findings 9.4 % of
their level of agreement on a Likert-scale, respondents strongly disagreed, 2.6%
ranging from strongly disagree to strongly disagreed, 9.9 % were neutral, 28.3%
agree, with statements related to agreed and 49.8% strongly agreed that the
proximity, receiving the customers do not costs of opening and operating an agency
take too long time due of good system. are cheap by a mean of 3.817 and a
From the findings the study established standard deviation of 1.29212. The
that 7.7% of respondents strongly respondents were also asked if the amount
disagreed, 3.0% of respondents disagreed, of fees charged on agency Services is lower
10.3% of respondents were neutral, and compared to going to the bank. The
36.9% of respondents agreed while 42.1% findings indicated that 6.4% of
of respondents strongly agreed that respondents strongly disagreed, 3.0% of
receiving the customers does not take a respondents disagreed, 10.7% were
too long time due of good system as shown neutral, and 32.6% of respondents agreed

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Nyambane and Munyengabe
INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023
while 47.2% of respondents strongly respondents agreed to the statement
agreed that the amount of fees charged on whereby 28.3% of respondents agreed,
agency Services is lower compared to go to 49.4% of respondents strongly agreed,
the bank as indicated by mean of 3.622 and 9.0% of respondents strongly disagreed,
standard deviation of 1.4993. In addition 3.9% of respondents disagreed, and 9.4% of
to the statement whether people use respondents were neutral that people do
agency services to avoid movement costs payment through agency services such as
to the main bank branch. The findings school, electricity bills, and water bills as
indicated that 7.3% of respondents indicated by mean of 3.791 and standard
strongly disagreed, 3.9% of respondents deviation of 1.31498.
disagreed, 9.9 % were neutral, 36.9% of Relationship between operational
respondents agreed while 42.1 % of structure and accessibility to financial
respondents strongly agreed that people services
use agency services to avoid movement The relationship between the operational
costs to the main bank branch as shown by structure of agency banking and
mean of 3.587 and standard deviation of accessibility to financial services in
1.41693. Lastly, the respondents were commercial banks in the northern
asked if people make payments through province of Rwanda was assessed using
agency services such as school, electricity Chi-Square Tests and correlation.
bills, and water bills. The majority of the

Table 3: Chi-Square Tests between operational structure and accessibility to financial

services

Value df Asymp. Sig. (2-

sided)
Pearson Chi-Square 34,048 12 .001
Likelihood Ratio 37,271 12 .000
Linear-by-Linear Association 1,614 1 .204
N of Valid Cases 230

The study results show that on overall adopting Pearson chi-square was
significance, there is a statistically conducted using the means for operational
significant positive relationship between structure and access to financial services.
operational structure and accessibility to As stated, our alpha is 0.05, if the “Asymp.
financial services because the p-value of Sig. (2-sided)” for the Pearson Chi-Square
all the measures which is p= .001 is less statistic is less than 0.05; there is a
than the set value of p< 0.05. Table 4.4 relationship between the variables. The
shows that Tests for Pearson chi-squire on Chi-Square significance value is .001 which
the respondents’ mean scores for is less than p=0.05, which shows there is a
operational structure and access to relationship between one’s agency banking
financial services revealed that both operational structure and accessibility to
operational structure and access to financial services.
financial services had a relationship. Thus,

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INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023

Table 4: Correlation between operational structure and accessibility to financial services

Operation structure Accessibility to
financial services
Operation Pearson Correlation 1 .861**
structure Sig. (2-tailed) .000
N 230 230
Accessibility to Pearson Correlation .861** 1
financial services Sig. (2-tailed) .000
N 230 230
**. Correlation is significant at the 0.01 level (2-tailed).

The Pearson Correlation was conducted operational structure associated with

using the means for operational structure agency banking products and services.
and access to financial services. The Effect of brand image of agency banking
findings were as shown in Table 5 Pearson on accessibility to financial services
Correlation analysis established that a Brand image is the current view of the
positive and statistically significant customers about a brand. The impressions
correlation was established between consumers have of a company extend well
operational structure and access to beyond the product or service the firm
financial services (r=0.861; p<0.01). The provides. Hence this study sought to
correlation was very strong, representing establish the relationship between brand
an almost perfect correlation between images of agency banking and accessibility
operational structure and access to to financial services. Respondents were
financial services. Higher access to asked about the extent to which they
financial services through bank agent agreed or disagreed with some of those
outlets is associated with a good factors and the results are summarized in
Table 6.

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Table 5: The extent to which the brand image of agency banking affects accessibility to
financial services
Variable Mean Std.

Disagree
disagree
Strongly

Strongly
Neutral
deviation

Agree

agree
F % F F F F
% % % %

Most clients are aware of how 15 8 25 73 109 3,7478 1,40395

different agency services
I provide work 6.3 3.4 10.7 32.6 47

People come to inquire more 17 10 23 85 95 3,8174 1,29212

about the bank's new 7.3 4.3 9.9
developments 36.5 42.1

Most of my clients are aware of 22 5 22 67 114 3,6913 1,4097

the
different fees charged on the 9.4 2.1 9.4 28.8 50.2
various products and services.

Most people are aware of the 14 8 25 73 110 3,6609 1,4011

existence of bank agents' outlet 6 3.4 10.7 32.6 47.2
shops

People are aware of the existence 17 7 23 87 96 3,8783 1,24787

of the various products offered 7.3 3 9.9 37.3 42.5
by
Commercial banks
(Source: field survey, 2016)

As per Table 6, First, the respondents were people come to inquire about the bank’s
asked if most of the clients are aware of new developments as indicated by a mean
how different agency services they provide of 3.8174 and a standard deviation of
work. From the findings the results show 1.29212. Thirdly, the respondents were
that 6.4% strongly disagreed, 3.4% asked whether most of my clients are
disagreed, 10.7 % were neutral, 32.6% aware of the different fees charged on the
agreed while 46.8% responded that they various products and services. 9.4%
strongly agreed that their clients are aware strongly disagreed, 2.1% disagreed, 9.4%
of how different agency services they were neutral, 28.8% agreed while 50.2%
provide work as shown by mean of 3.7478 strongly agreed that most of my clients are
and standard deviation of 1.40395. On the aware of the different fees charged on the
question of the people coming to inquire various products and services as shown by
more about the bank’s new developments. a mean of 3.6913 and standard deviation
7.3% strongly disagreed, 4.3% disagreed, of 1.4097. Further, respondents were
9.9% were neutral, 36.5% agreed while 42.1 exposed to the question that most people
% responded that they strongly agreed that are aware of the existence of bank agents’

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INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023
outlet shops. 6.0% responded that they offered by commercial banks shown by a
strongly disagreed, 3.4% disagreed, 10.7% mean of 3.8783 and a standard deviation
were neutral, 32.6% agreed and 47.2% of 1.24787.
strongly agreed that people are aware of Relationship between brand image and
the existence of bank agents’ outlet shops accessibility to financial services
by the mean of 3.6609 and a standard The end objective of the study was to
deviation of 1.4011. Lastly, on the establish the relationship between brand
question of whether people are aware of images of agency banking and accessibility
the existence of the various products to financial services in commercial banks
offered by commercial banks. 7.3% in Northern Province. The relationship
strongly disagreed, 3.0% disagreed, 9.9% between brand image and accessibility to
were neutral, 37.3% agreed while 42.5% financial services was analyzed by using
strongly agreed that people are aware of chi-square and correlation.
the existence of the various products
Table 6: Chi-Square Tests between brand images of agency banking and accessibility to
financial services
Value df Asymp. Sig.
(2-sided)
Pearson Chi-Square 30,463 12 .002
Likelihood Ratio 33,801 12 .001
Linear-by-Linear Association 2,428 1 .119

N of Valid Cases 230

The means for the brand image of agency banking and accessibility to financial
banking and access to financial services services (p=.002 which is less than
were used to compute the Pearson chi- p=0.05). The association was positive,
square to establish whether the nature and indicating that increased access to
magnitude of the relationship between the financial services was attributable to high
two variables. The findings show that there levels of financial services awareness. The
was a statistically significant relationship findings of the Pearson chi-square analysis
between the brand image of agency are shown in Table 7.

Table 7: Correlation between the brand image of agency banking and accessibility to
financial services
Brand image Accessibility to financial
services
Brand image Pearson Correlation 1 .805**
Sig. (2-tailed) .000
N 230 230
Accessibility to Pearson Correlation .805 **
1
financial services Sig. (2-tailed) .000
N 230 230
**. Correlation is significant at the 0.01 level (2-tailed).

The Pearson correction was established there was a statistically significant

between the two variables and found that relationship between the brand image of

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INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023
agency banking and accessibility to Effects of Agency Banking on
financial services (r = 0.805; p<0.01). The customer’s access to financial services
correlation was positive, indicating that Respondents were asked about the extent
increased access to financial services was to which they agreed or disagreed with
due to high levels of financial services some of those factors and the results are
awareness. The findings of the correlation summarized in Table 9.
analysis are shown in Table 8.

Table 8: The extent to which agency banking affects customers’ access to financial
services
Variable Mean Std.

Disagree
disagree
Strongly

Strongly
deviation

Neutral

Agree

agree
F % F F F F %
% % %
Agency banking has made 21 9 19 66 115 3,7609 1,40468
many people to open savings 9 3.9 9.4 28 49.4
bank accounts

The number of people coming

for financial services at the 14 8 25 76 107 3,8565 1,26122
shop is high due to fewer
difficulties
experienced compared to 6 3.4 11 33 47.2
normal banking facilities

The number of people coming 18 8 23 85 94 3,6174 1,45129

for
financial advice at the shop is 7.7 3.4 9.9 37 42.5
high

At the shop, people walk small 22 6 23 64 115 3,6304 1,40428

distances to get many financial 9.4 2.6 9.9 29 49.4
Services

The number of people using 15 7 25 73 110 3,8739 1,26654

remittance and making 6.4 3 11 33 47.2
payments
through banking agents is high
(Source: field survey, 2016)

As per Table 9, the respondents were asked banking has made many people open
to indicate the extent to which they agreed savings bank accounts by a mean of 3.7609
with five statements related to agency and a standard deviation of 1.40468. On
banking and whether many people open the question of whether the number of
savings bank accounts. The study revealed people coming for financial services at the
that 9.0% strongly disagreed, 3.9% shop is high due to fewer difficulties
disagreed, 9.4% were neutral, 28.3% agreed experienced compared to normal banking
and 49.4% strongly agreed that agency facilities. The findings show that 6.0% of

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INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023
respondents strongly disagreed, 3.4% remittance and making payments through
disagreed, 10.7% were neutral, 32.6% banking agents is high. From the findings
agreed while 47.2 % of respondents the study established that 6.4% strongly
strongly agreed that the number of people disagreed, 3.0% disagreed, 10.7 % were
coming for financial services at the shop is neutral, and 32.6% agreed while 47.2%
high due to fewer difficulties experienced strongly agreed that the number of people
compared to normal banking facilities as using remittance and making payments
shown by mean 3.8565 and standard through banking agents is high by a mean
deviation of 1.26122. The respondents of 3.8739 and standard deviation of
were asked if the number of people coming 1.26654. This implies that agency banking
for financial advice at the shop is high. The is continuously improving leading to
study indicated that 7.7% strongly significantly increased access to financial
disagreed, 3.4% disagreed, 9.9% were services in those banks that have rolled up
neutral, 36.5% agreed, and 42.5 % strongly the service due to its convenience and
agreed that the number of people coming efficiency in operation.
for financial advice at the shop is high by Relationship between agency banking
a mean of 3.6174 and standard deviation and accessibility to financial services
of 1.45129. On the question if at the shop, The third and final objective of the study
people walk small distances to get many was to determine the effects of agency
financial services, 9.4% strongly disagreed, banking on access to financial services in
2.6% disagreed, 9.9% were neutral, 28.8% commercial banks in the northern
agreed while 49.4% strongly agreed that at province of Rwanda. In this sub-section,
the shop, people walk small distances to the respondents’ views on agency banking
get many financial services as shown by and its relationship with access to
mean of 3.6304 and standard deviation of financial services were analyzed by using
1.40428. Lastly, the respondents were chi-square and correlation.
asked if the number of people using

Table 9: Chi-Square Tests between agency banking and accessibility to financial services
Value df Asymp. Sig.
(2-sided)
Pearson Chi-Square 34,217 12 .000
Likelihood Ratio 34,43 12 .000
Linear-by-Linear 3,682 1 .064
Association
N of Valid Cases 230

A test of chi-squire revealed that the services. The Pearson chi-squire analysis
respondent’s means scores on the as per Table 10 revealed that there was a
availability of agency banking had a statistically significant relationship
positive impact on accessibility to between agency banking and accessibility
financial services. Thus, means for agency to financial services (P=.000; p< 0.05). The
banking and access to financial services relationship was positive and very strong,
were used to compute the Pearson chi- indicating that greater access to financial
squire to determine whether there was a services was attributable to increased
significant relationship between agency utilization of bank agency services to pay
banking and accessibility to financial various utility and service bills.

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Table 10: Correlation between agency banking and accessibility to financial services
Agency banking Accessibility to
financial services
Agency banking Pearson Correlation 1 .774**
Sig. (2-tailed) .000
N 230 230
Pearson Correlation .774** 1
Accessibility to Sig. (2-tailed) .000
financial services N 230 230
**. Correlation is significant at the 0.01 level (2-tailed).
Table 11 shows Pearson correlation results utilization of agency banking to pay
of agency banking and accessibility to various utility and service bills. Most of
financial services. The Pearson correlation these payment services are provided
analysis revealed that there was a through POS services or mobile money
statistically significant relationship transfer/payment services. When
between agency banking and accessibility compared to the long distances to be
to financial services (P= 0.774; p< 0.01). covered, the costs of travelling and the
The relationship was very strong, long queues, the rural population prefer
representing that higher access to transacting through the bank agents of the
financial services was caused by increased banks in which they hold accounts.
DISCUSSION
This study had 3 specific objectives relationship between the rural people and
namely: to investigate how the operational a financial institution is a bank account.
structure of agency banking influences Lack of availability of appropriate, low-
customer’s access to financial services, to cost, fair and safe financial products and
establish the relationship between brand services to certain segments of society,
images of agency banking and accessibility supplied by normal suppliers is financial
to financial services, to determine the exclusion. [20] observed that there are
effects of agency banking on access to some problems with financial services in
financial services in commercial banks in rural areas. The demand for financial
the Northern Province of Rwanda. The services in rural areas has increased but
discussions in the following sections small population size results in high cost
highlight the key findings of the study and makes financial services less attractive
based on the objectives. to people in these areas. Info Resources
Findings on effects of operational also highlighted various challenges to rural
structure on customer’s access to financial services, the most important of
financial services these challenges being the high transaction
The first objective was to investigate how cost. However, with most banks having
the operational structure of agency either completely done away with or
banking influences customer’s access to considerably lowered the charges
financial services. The study found that associated with deposit and withdrawal,
commercial bank customers get adequately the most critical barrier to accessing
good services from agents of commercial financial services has been addressed. This
banks in the northern province of Rwanda has increased the number of people in rural
since the means score as per Table 3. Table areas who own bank accounts and thus can
4 and Table 5 indicated that (r= 0.861) transact at the agency outlets. The
there is a relationship between one’s challenge of difficult topography and weak
agency banking operational structure and configuration of infrastructure that has for
accessibility to financial services. The first a long time discouraged banks from
point of contact that establishes a opening ATMs or branches in rural areas

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has been addressed by establishing agency unbanked rural population has access to
banking. This has profoundly seen the financial services.
rural populace avoid travelling long Findings on how agency banking
distances to cities to get financial services, influences customers’ access to financial
which were not only costly but also services
tiresome and prohibitive. The effect has The third and final objective of the study
been increased access to financial services, was to determine the effects of agency
hence the positive association between banking on customer’s access to financial
operational structure and access to services in commercial banks in the
financial services. Northern Province of Rwanda. The study
Findings on the relationship between the found that agency banking is moderately
brand image of agency banking and good indicated by means score and
accessibility to financial services standard deviation as per Table 4.9.
The second objective was to establish the However, The Pearson chi-squire and
relationship between brand images of Pearson correlation analysis revealed that
agency banking and accessibility to there was a statistically significant
financial services. The study found that relationship between the agent’s bank and
agency brand image is moderately good access to financial services (see Table 10
since the means score (see Table 6) is and Table 11). The relationship was
great. However, it has a significant effect positive and strong (r= 0.774), indicating
on determining the accessibility to that greater access to financial services
financial services. Therefore, on-brand was attributable to increased utilization of
images and access to financial services, agency banking to pay various utility and
the study established that (see Table 7 and service bills. This implies that with most
Table 8) the respondents respectively providers adopting technology-based and
agreed (79.6%) that most clients were cashless payment systems due to
aware of how different agency services congestion in the main cash customer
provided work, people go to enquire more service halls, most of the agents of the
about the bank’s new developments, services have responded positively to such
people are aware of the existence of the strategies, utilizing such payment
various products offered by commercial services. Most of these payment services
banks and most people are aware of the are provided through POS services or
existence of bank agents’ outlet shops. mobile money transfer/payment services.
There was a significant, positive When compared to the long distances to be
relationship between brand images and covered, the costs of travelling and the
access to financial services. With high long queues, the rural population prefer
levels of awareness of available financial transacting through the bank agents of the
services at the agency outlets, the costs banks in which they hold accounts. Hence
related to the provision of the services as advantages associated with bank services
well as transaction costs among other have led to increased access to financial
pieces of financial information have services and by large, financial inclusion.
increased efforts to ensure that the
CONCLUSION
In line with the first objective of the study its business operations. This corresponds
which sought to determine the effect of with [21] since the study found that good
operational structure on accessibility to operational structure in agency banking
financial services, the study revealed that very great extent influences banks'
good operational structure is a major international business operations.
contributor to customer’s access to Secondly, the study concludes that there is
financial services. The banks do a positive relationship between bill
understand the application of good payments and access to financial services.
operation structure in agency banking, in Advances in innovation that have brought

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INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85, 2023
about the adoption of telco-money transfer perform other services such as a collection
services and the extensive introduction of cheques to enhance financial access and
and penetration of point-of-sale devices inclusion. Secondly, the study
have encouraged many service providers recommends improvement of the brand
and businesses to adopt cashless image of all agent banks operating in the
payments. Due to the convenience retail market. The study further
associated with cashless payments that recommends that information and
save bank clients’ time associated with awareness should be put in public to build
queuing to make payments of some bills confidence and trust in agency banking as
such as electricity and water bills as well a secure, efficient and modern way of
as the general security related to cashless banking. Riding on the positive influence
transactions, many people have adopted of customer’s access to financial services,
such kinds of payments whose imperatives commercial banks and other financial
include operating a bank account. Thus, institutions should make careful efforts to
with such kinds of services as payment of institutionalize customer education
bills, financial inclusion among the rural programs that will raise awareness among
poor has been enhanced. The study further not only existing clients but also potential
concludes that financial services customers. This has the potential to
accessibility by customers through increase take-up of financial services thus
banking agencies had a positive impact on benefiting both the client and the financial
the financial performance of commercial institution.
banks in Rwanda with many of the banking Suggestions for further studies
institutions indicating that agency banking The study relied on self-reported data
had made it easier for them to reach out to mainly from the commercial bank
many potential clients without investing perspective alone and used a single
so much in opening branches hence it's a industry setting. Further research could
cost-effective measure. Finally, the study seek to address this limitation by using
concluded that financial services multiple industry settings such as
awareness positively influences access to telecommunication companies to conduct
financial services. When people are aware their studies and this would enhance the
of the available services, are provided with validity and generalization of the research
more accurate and up-to-date information findings.
on new developments in the agency Although the bank agents were fit to give
banking segment and know where to get reliable data, there is a possibility that the
the services, their access to financial information from these agents was not the
services increases thus enhancing only source of information about agency
financial inclusion. banking and accessibility to financial
Recommendations services. It may be vital to use both
Commercial banks should ride on the information from the bank managers and
successes made in agency banking to scale compare it with the views of the other
up access to financial services hence stakeholders like the competitors and
financial inclusion by opening up more suppliers. Possibilities of exaggerated
outlet networks to considerably reduce the results from self-reported data may also
distances covered by the rural poor. Better exist where secondary data is not available
geographic outreach can remove distance for further validation. To handle this
as a barrier to financial access for both the limitation, future research can combine
bank and the client, thus allowing banks to the views of managers, customers,
be more responsive and less intimidating suppliers, competitors and other relevant
to their deposit customers. This should be organization stakeholders.
augmented by allowing the agents to

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CITE AS: David Nyambane and Munyengabe Albert (2023). Agency Banking and
Accessibility to Financial Services of Commercial Banks in the Northern Province of
Rwanda. INOSR HUMANITIES AND SOCIAL SCIENCES 9(2): 66-85.
https://doi.org/10.59298/INOSRHSS/2023/6.5.4000

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