relationship between bank and customer

It is extremely important for both the banks and the general public to be aware of the relationship between bank and customer. Both parties should know what to expect when one walks into a bank and what to expect from the relationship if a contract is signed by the two parties.

Like all relationships, one needs to know their expectations and rights in order to have a mutually working relationship. With this in mind we will look at some of the contractual relationship between bank and customer:

1. Debtor/Creditor Relationship between bank and customer

A debtor is one who owes while a creditor is the one who is owed. When a customer opens a deposit account at the bank, the bank becomes a debtor to the customer as it is holding the customer’s money, which should be repaid when the customer demands it. The customer is therefore the creditor to the bank. In this relationship between bank and customer, it is the customer’s responsibility to ask for their money back and it is not the bank’s job to seek to repay the debt.

However when the customer borrows money from the bank, then they become the debtor to the bank while the bank is a creditor to the customer. In this relationship between the bank and customer, the customer is expected to repay the debt as agreed where the customer defaults; there is a problem with the debt.

2. Principal/ Agent Relationship between bank and customer

When a bank is dealing with a third party on behalf of the customer, the bank is an Agent while the customer is the Principal.

An Agent is one employed to work for a Principal to make contracts on their behalf. A Principal is one who informs the Agent what he wants him/her to do on his behalf.

Other examples of Principal / Agent relationship between bank and customer is when the banks arranges for insurance, sends money either abroad or within the country (generally money transfer) on behalf of the customer. Agency banking is another example of Principal agent relationship between bank and customer

3. Bailor/Bailee Relationship between bank and customer

One of the bank’s services offered to the customer is to receive valuables and documents to hold on their behalf. When this happens the bank has to take reasonable care of the property and this is a Bailor/ Bailee Relationship between bank and customer.

A Bailor is the depositor of the property who is the customer. A Bailee receives the property from the Bailor and must look after it in a professional manner. The bank is then called the ‘Bailee for reward’ since a fee is charged.

There should be complete good faith especially where customers have come to rely on the banks advice which sometimes is called Fiduciary Relationship. The relationship between the Bank and Customer creates an expectation of trust and there should never be undue influence exerted.

Advancement in Mobile Banking Use

Mobile Banking

Mobile banking is where one can send money through the phone and the receiver access the funds without having to go through the bank.  Majority of the mobile phone companies have collaborated with Banks to enable their subscribers access money in their bank accounts through these money transfer facilities on mobile phones.

The bank customers must subscribe to Mobile banking facilities. subscribers must ensure that confidentiality is maintained. They must also avoid fraud, by use of the secret code which sent to the customer. This code is also known as the Personal Identification Number, which should only be known to the customer and should at no time be revealed to any third party.

This has been a great breakthrough for banks given that their customers can access money conveniently.  They recieve Funds anytime, anywhere and not restricted by banking hours.

Mobile Banking range of services

There are a range of services which the bank’s customers  and banking industry in kenya can enjoy through this collaboration

• They can inquire their bank account balances without necessarily visiting the banks premises or the Automatic teller machine (ATM). This reduces queues in the banking halls and improving on customer service.
• The customer can purchase airtime or phone credit  through their accounts without having to withdraw the cash first and then purchasing the airtime saving on the time for the customer.
• The customer can sign up to be alerted by the bank anytime there is a deposit in their account, for example, salary deposit. Customers do not have to visit the bank premises to be able to budget and even make transactions.
• Bank customers do not have to carry cash which can be a great risk. They are still able to easily pay for goods or services through transfer of the money to the vendor. some of the services include Kenya Airways Tickets purchases, pay for water and electricity bills.
• The customer can transfer money from their bank accounts to their mobile accounts and access the funds.
• In recent days, some mobile service providers have teamed up with international money transfer companies like Western Union. this partnership allows people in the Diaspora to transfer money back home safely and conveniently. the Recepients of such funds are not bound by banking hours to acess these monies unless the bank is an agent of Western Union.

 Mobile Banking and Government Development  Policy and  Planning

With the Vision 2030 in Africa and indeed the developing world,  gearing up for twenty four hours economyis becoming a reality through mobile banking.  Banking in Kenya has greatly been revolutionized by mobile banking with bank customers able to  access of their money from the bank accounts twenty four hours a day, seven days a week.

 History of Front office services Activity

Front Office Services Activity

Traditionally Savings and Credit Societies facilitated provision of affordable loan facilities to its members. Majority of these Savings and Credit Societies usually loan their members three times the shares they hold with the society. These types of loans are categorized as school fees loan, emergency loans or quick loan and development loans. The loan repayment period is usually between twelve and thirty six months.

The idea of Front Office Services Activity was birthed in these Savings and Credit Societies. AT that time, banking services were out of reach for the middle and low class income earners due to the high account maintenance commission and minimum account balance.

The main purpose of this Front Office Services Activity was to enable members open accounts and operate them. Even though this was a good idea there are some un-scrupulous members of Central Management Committee membership who were determined to swindle their members of their hard earned income through this Front Office Services Activity.

 Challenges of managing front office services activity

Front office services activity is a savings and deposit taking enterprise. this attracts unscrupulous people. They are supervised by the Ministry of Co-operative Development. The Ministry does not have or seem to have capacity to adequately supervise the FOSAs.

Due to loopholes created by inadequate supervision, corrupt Committee members embezzle funds from the front office services activity account-holders’ savings accounts.

Central Management Committee members are elected into office. Majority of them do not have qualifications to manage this Front Office Services Activity.

 Measure that can used to protect front office services Activity members

In order to protect members deposit and save the Front Office Services Activity, the following should be put in place:

• A regulatory body should be establishing to monitor the activities of each Front Office Services Activity. This body should also vet the Savings and Credit Societies who intend to start offering these services.
• Qualified personnel should be engaged to effectively run these services. These staffs will be tasked with making sensible business decisions, formulating policies and controls, and taking responsibility of  financial performance of the front office services activity.
• The deposit protection fund should be expanded to include the front office services activity, to protect the members from losing their hard earned monies.
• The services of independent auditors should be obtained as opposed to the Ministry of Co-operative Development auditors. Final accounts should be availed to all members and the public at large.
• A Board of Management should be constituted to ensure that the  Front Office Services activity are professionally managed.

The critical role played by front office services activity in the economic development should be recognized and encouraged. Countries should adopt this kind of banking channel to ensure financial inclusion for its poor and marginalized citizens. Front office services activity could be considered as a type of Agency banking.

After rushing into the banking hall in the nick of time, the customer service agent in the bank looked at the time on her computer and it was pretty obvious she thought i was late. This made me want to apologize for such a mad dash into her territory. I though she should have been happy for a customer since there was no other customer in the banking hall.

customer service in the bank

I was the one who talked to her first, since she had not acknowledged me by saying hello or good afternoon. After I told her what had brought me to the bank and the types of bank accounts I wanted to acquire from her, she told me that I could fill out forms but I would only get my products and accounts on Monday since they had run out. This was alright, but I would expect that she would try to sell me another product after finding out why I was interested in the product I was looking for. She could also have sent me to the banks’ other branches for the same product.

The customer service in the bank was lacking since I left the bank with only what I asked for, nothing was offered voluntarily. The bank officer did not apologise for not having the products.

Below are 4 basic “musts” for customer service in the bank to attract and retain customers.

Customer service in the bank –smile

The receptionist or front desk officer should smile and welcome all who come into the branch with an appropriate greeting. The greeting and smile should not be for those who look like they have money but for all who come into her domain. a smile is very simple and easy to give, but it is very important to customers.

Customer service in the bank –  listen attentively

The service agent or bank officer should listen to my request or needs to determine what best suits me. The service agent can persuade a potential customer to get more than one product whne they have the product in place. The potential customer may be after information and advice and when this is given before even opening an account, then the customer feels more satisfaction. They do not have to come later to the bank to sign up for another product when they could have finished at ones

Customer service in the bank – available products

The bank should have a well organised stock control and replenishing system so that they do not run out stationery, cards and currency denominations. It is very frustrating to get to the teller who advices you they can only pay in denominations you did not want. Have enough of all currency or advice customer to give you a few minutes as you get the denominations. Sometimes the stationery , like deposit slips run out and one is forced to move from place to place looking for the forms. They are informed the forms are not currently available after wasting time in the banking hall.

Customer service in the bank – Man the service desk

The service officer desks are in many banks out in the banking hall. It is very vexing when the service officer is never seated at their desk or has to keep moving to the back office. Sometimes the service officer also answers queires on their desk so they are not able to attend to customers who are face to face with her. The banks should have the phones received by others so that the customers in the banking hall may be served.

Many of us have many bad things we can say about our banks’ customer service.we should also acknowledge when the banks go out of their way to ensure we are well served and taken care off. Many banks have customer service as a deliverable for their staff and the banks must ensure customer service in the bank is felt by the customers.

How to get Safe Deposit Lockers

The banks and financial institutions offer these boxes. They are usually of small, medium and large size. The size preference is noted on the application form. The safes are not very large and mainly about 20 inches length, 15 inches wide and 10 inches in depth.

Safe deposit lockers

The banks charge for safe deposit boxes. The amounts differ from bank to bank and range from a minimum of Kenya shillings 2,000 per annum. Some banks also require that a refundable deposit amount is banked with the bank before the safe deposit box becomes active.

Safe Deposit Lockers

The bank is not aware of the documents or items in the safe deposit boxes. When applying for a safe deposit box, you are required to declare that: the nature of the documents or items in the box is not illegal items like explosives and guns. The bank is indemnifies by your signature to this clause.

Applicants for safe deposit lockers

For individuals all the banks require is an original Identification document and a copy of the same.  For corporate or limited liability companies, the application process requires a copy of the resolution of the board, with a company seal. For partnerships, a letter must be written to the bank stating the intention to rent the safe deposit box. The letter has to be signed by at least two directors and it must be accompanies by the application letter. For Non Governmental organisations, clubs and societies minutes showing the discussion and signed by the at least two directors must be presented.. The minutes must also name the appointed agents for operating the safe deposit box.

Advantages of Safe Deposit Lockers

• Security of your valued belongs like wills and jewellery
• The safe deposit lockers are fire proof
• Access to items in the safe deposit box is within the banking hours.
• Secrecy and privacy for the owner of the safe deposit locker

The owners of the safe deposit lockers are issued with a 2 sets of keys for the safe deposit lockers. The individual owner of the lockers need to include their safe deposit lockers details as it is usually not known to family members.

Banks and financial institutions should advertise more about safe deposit Lockers especially with the disasters of fires and theft that are on the increase.

What is cheque truncation system?

Cheque truncation is a clearing and settlement system that makes use of images and electronic payment data. It does not rely on the exchange of physical cheques. Cheques will no longer be taken to the automated clearing house by courier. Telecommunication links will be used by banks and their branches to send cheque data for settlement.

The customer will draw a cheque and present it to the bank. The bank where this cheque is deposited is known as the collecting bank. The collecting bank will take the image of the cheque leaf that has been presented and also read the information line with the magnetic ink character recognition (MICR) code on the cheque. The information together with the amount to be paid is sent to the paying bank through the automated clearing House for settlement.

The new cheque truncation system is relevant for Kenya shillings and domestic foreign currency cheques drawn on Kenyan banks. This includs United States, Euro and Sterling Pound cheques. For offshore drawn cheques, the old process will not be changed

Advantages for Bank cheque truncation system in Kenya

• Cheque truncation will reduce the time it takes to transmit data between banks.
• The time saved will reduce the clearing time
• There will be accurate reconciliation of accounts
• Paperwork will be minimal.
• Fraud avenues emanating from cheque substitution will be reduced because of the elimination of physical movement of cheques. Any changes on the cheque leaf can be detected.
• The liquidity of the economy will be generally improved because of the reduction of the clearing cycle. The time taken to clear funds will be faster ensuring funds circulate in the economy at faster rates.

Security features for the Bank cheque truncation system in Kenya

• The customer should use dark coloured ink which could either be black or blue when drawing the cheques. This is because the new cheques have been redesigned with security features that identify alterations and fraud attempts. Bank stamps should not be placed where they interfere with the clear appearance of the cheque image.
• Transmission of the cheque details from one bank to another will be encrypted and other security techniques enhanced, so that integrity of data from one bank to another is maintained. Banks cannot alter the cheques either and any attempt to make alterations will result in the image being returned to the originating bank.
• There is a security water mark in the design
• Extensive use of new ultra violet sensitive paper
• Tamper evident paper stock
• Micro text features
• Corporate size cheque leaves which are 4 inches width and 7 inches length. The size of the new cheques is important because of the enhanced security features and the new scanners will easily pick and transmit the cheque settlement details for the electronic clearing process.

Unlike in previous operations, where a cheque is unpaid it will not be returned to the customer. The collecting bank will instead issue an Image Returned Document (IRD) to the payee. The document contains the unpaid cheque image, the reason for the return and the payment information. The IRD can be represented depending on the reason for unpaying.The IRD is sufficient advice for the unpaid cheque.

Bank cheque truncation system customer requirements

The old cheque books must be replaced with the new ones. The deadline has been moved to August 2011 from 31^st May 2011. When the deadline expires, the old cheque books will no longer be valid. Customers have to order the new cheque books from their banks as they normally do. The Bank cheque truncation system channel in Kenya will improve the banking sector service to customers.

personal bank accounts in kenya

The central bank of Kenya as a regulator of all banks, and with Kenya Bankers Association has some requirements that all Kenyan banks must meet as they bring in new personal bank accounts holders. When banking in Kenya, the banks are required to Know their customers and hence the need to supply the bank with the documents.

Complete application forms for personal bank accounts in Kenya

The Kenyan banks all have personal bank accounts opening forms that require to be completed. Most of these forms ask for information that is backed up with the documents that have been requested. The account opening form is very important as it identifies the type of account that you want. The form usually has the terms and conditions of having the personal bank account. These are the legal requirements and rules that govern your relationship with the Kenyan bank. The form must be signed by the applicant. The details captured in this form are used by the bank to send you statements and other communication. It is important that you give correct details in the form as requested.

Identification for personal bank accounts in Kenya

Have the identification papers ready as you approach the bank that you are interested in to apply for your persoanl bank accounts. The bank will require the original papers and copies of the same. The documents are usually the National Identification or a Passport. The banks prefer to use the National Identification to a passport since all Kenyans who are over eighteen years of age should have one.

Photos for personal bank accounts in Kenya

Kenyan banks require photos as a way to confirm that the persons presenting themselves to the bank to apply for the personal bank accounts are the genuine person. Some banks photograph customers in their banking halls and so do not require you to carry the photo. The photos should be current copies.

Evidence of income.

The Bank would like to know how you have obtained the funds you will be depositing. This is important to curb criminal activities such as fraud and money laundering. Most employed individuals use payslips.

Minimum account opening balance.

Depending on the account being opened, the bank will request for the required amounts to be banked or a completely filled out deposit form accompanied by the cash requirement to be part of the account opening forms. Some accounts are opened on Zero balance.

Physical evidence

In recent times, the Banks also require that applicants give copies of their water or electricity bills. These are required to confirm the physical residence of the customer. Where the applicant does not have the bill in their names, the banks require a letter from the Landlord. The Landlord writes to confirm that the applicant is a tenant. The applicant is also required to give a map or directions to the physical location where they are tenants.

Reference.

Many banks require that the customer be referred to them. This requirement is undergoing many changes with the many changes in the banking industry. The reference may be given by the employer, introducing you to the bank. The account opening staffs usually act as the referral agents.

In conclusion, though the documents and requirements seem cumbersome, many are required by the Kenyan Banking regulators. The above are requirements are for citizens. Foreigners have a few extra documents they have to provide. To have the personal bank accounts in Kenya opened quickly, approach the bank with the above documents.

How to Get the Best Bank Accounts in Kenya

A bank account in Kenya is a recording of all the financial transactions that happen between the customer and the banking institution. Banking in kenya has provided several types of bank accounts to cater to all.

One of the most important functions of banks is taking in deposits. This is according to the central bank of Kenya. People, on the other hand, also prefer to deposit their savings in the banks’, as they can earn interest and also avoid the danger of theft.

Types of bank accounts in kenya

Types of accounts on offer by banks vary but most banks work from the same script in their product offering

typesofbankaccountsinkenya

Cheque Bank accounts in kenya

A cheque account can also be referred to as a current account which is run in a transaction account. When money is deposited in this kind of account, the owner can withdraw it at any time. The choice of withdrawal amount and the number of times a customer wants to withdraw is left to the customer. Customers use cheques leafs to withdraw cash or make payments to others or making purchases. ATM cards can also be used. Very few banks pay interest on these types of accounts but customer pay banks what is commonly known as bank charges. These charges are levied by the bank to the customers for use of the banking facilities. A customer can demand his funds without notice to the financial institution.

Savings bank accounts in Kenya

These accounts are used by banks to collect money from customers, which the banks then lend to those who need loans. The customers earn interest on their savings accounts. The banks usually restrict the amount and number of times a savings account customer can withdraw. Few banks give cheque books for savings accounts, though majority of the banks give ATM cards to their customers

Money market bank accounts in kenya

A minimum amount is required to open this account. The minimum amount is the amount that must be in the account at any one time. Charges are levied on accounts that are below minimum, and these accounts are eventually closed if they are not funded. These types of accounts earn interest for the customers. The number and amounts withdrawn per month are restricted depending on the bank or financial institution.

Fixed deposit bank accounts in Kenya

This account has various names, for example time deposit or certificate of deposit. The amounts deposited in the account are fixed for a specified time. Different amounts and with corresponding different time periods earn different interest rates. The longer the amounts are held, and the more the amounts held then the customer earns higher returns or interest. After the customer has fixed a deposit, he can pay a penalty to the bank to have access to his funds.

Banks compete by the products they offer to the public. in kenya the tpyes of bank accounts on offer are many and the customer is spoilt for choice.