As commercial banks close more of their branches, Post Bank has emerged as one of the winners by gaining new revenue streams from its agency banking services. According to the Central Bank of Kenya’s most recent figures, commercial banks have closed 59 branches and 430 automated teller machines (ATM) in five years until 2021.
The change has been attributed to a broad digital transformation, which has seen banks make significant investments in the infrastructure for providing online and mobile services. According to Post Bank managing director Raphael Lekolool, the state-owned savings bank is seeing an increase in revenue from the services it provides in 97 locations on behalf of other institutions.
“We have seen an upsurge of customers of other banks coming to our branches to transact. When you look at the number that we are serving, it has gone up because of the agreements we have signed with commercial banks,” he said.
“We expect this to be the norm because most banks, as they do away with some of their branches, they have in the process created a need in our branches for them to serve their customers.” In exchange for agency banking services from commercial banks, the struggling Post Bank offers cash withdrawals, deposits, and account balance inquiries through a vast network of physical locations.
Banks may handle large payments including wages, dividend payouts, and loans in Post Bank locations thanks to the agreements under a non-disclosed revenue-sharing system. To continue providing stipends to the elderly, Post Bank will maintain its branch network thanks to the collaboration with the government under a social welfare program.