AGENCY BANKING PRACTICES AND NON-FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN RWANDA

Abstract

In spite of all the efforts put in place by the banking industry, the core contest has always been to increase the satisfaction of a customer. Currently, commercial banks’ customers are at an exposure of more options in choosing the banks than the past. Every bank is trying to retain and maintain their valuable customers at any cost, for sustainability. Banks are adopting different software and technological aspects to make their customers satisfied which costs banks big sums of their revenues on the other hand. This therefore prompted the researcher to institute the effect how non-financial performance of commercial banks in Rwanda is affected by the agency banking. Kenya Commercial Bank (KCB) Rwanda was used as a reference. The chief purpose of this study was to analyze the effect of agency banking on the non-financial performance of commercial banks in Rwanda. The study adopted both descriptive and correlative research designs. Questionnaires were addressed to 43 respondents selected from among the KCB staffs and an interview was held with 5 respondents from the bank’s middle managerial level. Data was analyzed using SPSS for descriptive statistics to testagency banking effectiveness and the relationship among variables of the study. Multiple regression analysis was used to test relationship between the research variables. Findings of the study captured that 68.2% changes in financial performance of commercial banks in Rwanda come as a result of agency banking. Besides, the ANOVA p-value was found to be 0.001 which is less than alpha (5%), an indication that there is strong and positive correlation between agency banking and non-financial performance in commercial banks in Rwanda and in particular KCB Rwanda. These commercial banks were recommended thus: in order to have safe use of agency banking, the administration of the banks should look into safety measures of agency transactions and commercial banking stakeholders are recommended to sensitize the general public on agency banking components. Finally, this bank is recommended to massively extend its agency