Agency banking and customer satisfaction in commercial banks in Uganda: a case study of Centenary Bank

Abstract

The purpose of the study was to examine the impact of agency banking on customer satisfaction by customers of Centenary bank. The study was guided by three specific objectives which included; to establish the uptake rate of agency banking at Centenary Bank, to establish the level of customer satisfaction about agency banking at Centenary Bank; and to establish a relationship between customer satisfaction and agency banking and be able to measure the impact of agency banking on customer satisfaction at Centenary Bank.

The study adopted a cross sectional research design that involved the use of both qualitative and quantitative research methods. Qualitative research involves the study of cases and makes little numerical data or statistics but relies heavily on verbal data and subjective analysis. Quantitative research involves the use of both numerical data and discrete variables to get the respondents level of understanding about the topic under study. The preference for a cross-sectional research design is because it collects information from a random sample that has been drawn from different categories of the population at a point in time. This was applied to a sample size of 246 for agents and customers and 55 for bank staff using questionnaires. Additionally, interviews were carried out on 3 bank Managers and 5 of the bank’s top Agents by transaction value from the central region.

It was established that agency banking has significantly impacted the financial landscape, especially in extending banking services to previously underserved or remote areas. By allowing third-party agents to offer basic banking services on behalf of banks, agency banking has increased accessibility to financial services for a broader segment of the population. Agency banking has provided a convenient way for customers to access basic banking services without the need to travel to a traditional bank branch. Furthermore, agency banking has provided customers with a solution to the long bank queues by availing faster services, without queues. This has likely contributed to an overall improvement in customer satisfaction. The ability to perform transactions closer to home through agency banking has likely led to higher customer satisfaction levels. People can perform tasks like cash deposits, withdrawals, and balance inquiries more easily, saving them time and effort. Agency banking has potentially reduced these wait times, leading to increased satisfaction among customers who prefer quicker service. Although, it is important to note that challenges such as network connectivity issues, and potential security concerns might have affected customer satisfaction in some cases. For example, where the network was unstable, and customers could not access any service and also early closure of agent out-lets i.e., by 6:00pm due to fear off robbers consequently affecting convenience. Therefore, agency banking has the potential to enhance customer satisfaction in Uganda by improving accessibility and convenience. However, its success relies on addressing the highlighted challenges effectively and continually improving the customer experience. Monitoring customer feedback, adapting services based on customer needs, and maintaining a strong agent-customer relationship are all important factors in ensuring high levels of customer satisfaction in the context of agency banking.

The study recommends that ensuring that customers fully understand how agency banking works and the services offered is crucial for maintaining high levels of customer satisfaction. Adequate education can prevent misunderstandings and frustrations for both the banks and the customers.