Analysis of the Effect of Agency Banking on Bank Performance: A Case Study of DFCU Bank, Acacia Branch

Abstract

The purpose of this research was to analyze the effect of agency banking on bank performance a case study of DFCU bank. This study was based on a sample of 100 respondents including both bank agents and customers in Kampala district. The data collected was captured in Excel and later imported to SPSS for further analysis. Summary statistics such as frequencies and percentages were obtained for variables under analysis. Correlation coefficients were obtained for all variables to analyze possible linear relationships that existed among them. A multivariate analysis based on linear regression was carried out on the variables. The results revealed that there was a significant relationship between the accessibility of banking services through agency banking and the financial performance of DFCU bank at 5% level of significance. There was no significant relationship between low cost of service through agency banking and the financial performance of DFCU bank at 5% level of significance. There was a significant relationship between increased customer transactions through agency banking on the financial performance of DFCU bank at 5% level of significance. In conclusion, at a bivariate level, ANOVA results revealed that accessibility of banking services through agency banking and increased customer transactions through agency banking significantly affect the financial performance of DFCU bank. However, at multivariate level, the regression results revealed cost of service and customer transactions through agency significantly affect the financial performance of DFCU bank. Last but not least, the study recommends that DFCU bank should leverage on technology to augment efficiency and convenience to their customers since agency banking in itself uses technology that is up to date to enable the customers transact and the transaction updated on real-time. The study also recommends that DFCU bank should consider intensifying the agency banking network which will ensure service accessibility by customers and thus improving financial performance.