Assessing the deepening of financial inclusion through linkage banking in Kampala. A case study of Centenary Bank

Abstract

The purpose of this study was to assess whether linkage banking has deepened financial inclusion in Kampala using Centenary Bank as a case study. The study adopted a survey-based approach to purposively collect data from 50 Centenary Bank Ltd. customers and staff in Kampala district to capture their beliefs on whether linkage banking had deepened financial inclusion. Data was collected using a self-administered research instrument and quality control was ensured by establishing the internal consistency of the research instrument that resulted in an overall Cronbach's reliability coefficient of 0.775. The data was analyzed using descriptive statistics measures of central tendency and variability. The study results revealed that linkage banking will go an extra mile to ensure that the excluded will get informed about all the available bank services thereby deepening financial inclusion. For the challenges of using linkage banking to deepen financial inclusion in Centenary Bank, running out of cash by the bank agents was identified as the main challenge by the majority of the participants. The other identified challenges were: fraud, unstable networks that affect the transaction processes, inadequate float that hinders the withdrawing process during peak hours, the inflexible conditions during the opening of accounts which leaves bank agents with minima roles, security concerns at most of the bank agent stations which erode customers’ trust who may be intersected in large transactions. The identified strategies for deepening linkage banking in Centenary bank, include, banks should strengthen partnerships with telecommunication companies, insurance companies, microfinance institutions, collaborating closely with the government for the generation of government-to-person payments to enhance customer access. The study recommends that financial institutions should encourage banking agents to open up services in rural areas rather than concentrating in urban areas. They should also provide liquidation centers to facilitate the withdrawing process.