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.

What are demand deposits in Kenya

Demand Deposits in kenya

Demand deposits in Kenya are also known as call deposits. The investor does not have to give notice to withdraw their funds from the financial institution. The financial institution does not give high interest rates for demand deposits in Kenya.

Most demand deposit in Kenya accounts are charged monthly fees for maintenance. The interest rates in these demand deposits are usually lower than the bank charges especially, for small value investments. It is therefore in the interest of the investor to determine when they would require demanding or calling their deposits and if it is more than seven days, considering time deposits as an investment option.

The types of demand deposits that will be mentioned are savings accounts, money markets and current accounts. They are explained below

Savings accounts type of demand deposits in Kenya

Savings accounts are demand deposit accounts that are used by investors to accumulate funds to perform certain tasks. These accounts may also be used to build retirement benefits. The returns or interest paid on these time deposits are average. The savings accounts are considered a safe way of investing for the future.

Money market type of demand deposits in Kenya

Money market accounts are demand deposits where an investor trades in money and not stocks. The investor’s interest rate is not assured and it changes daily. These are seen as risky investments and the investor could loss even part of the principle amount invested. The bank charges minimal amounts for bank charges on these demand deposits.

Current account type of demand deposits in Kenya

Current accounts are also referred to as checking accounts and are demand deposits. The investor usually does not earn any interest for this kind of investment. The bank charges and fees vary depending on the type of checking account, for example, a private banking investor may have higher charges compared to an ordinary investor.

The advantage of demand deposits is that money can be withdrawn immediately. With the advent of mobile banking and ATM card services, the investor has access to their funds any time of day or night. Demand deposits are offered by all banks in Kenya. The rate of interest or return varies from bank to bank.

An investor has to decide the target and reason for the investment choice. It is advisable for an investor to talk to the bank officers and find out about the demand deposits in Kenya that will suit all their