This study is carried out to identify the factors affecting the adoption of Agency banking in Kenya. The commercial banks operating in Kenya are taken as Population of the study that is 18 commercial banks. Among them the research was conducted and data gathered on the three pioneers banks in agent banking service (Co-operative bank, united bank, and lion international bank). So as to meet the research objective 58 questioners were distributed to e-banking department employees and structured interview were also held with E banking department managers of sampled banks. Purposive sampling method was employed to draw the sample from the population. The study statistically analyzed data obtained from the survey using Statistical Package for Social Sciences 20.0 V (SPSS) and descriptive statistics particularly data mean used for interpretation purpose. The result of the study regarding the major driving forces that initiate Kenyan banks to adopt agency banking are: the desire to cover wide geographical area, desire to satisfy rapid change of customer needs & preferences and the desire to improve productivity and Organizational Performance. The major factors affecting the adoption of agent banking are: lack of giving proper attention to the service as its given to other conventional banking services, Board of directors, top management and staffs resistance to change in technology, Lack of proper coordination among stakeholders of the bank - in setting goals and following up the implementation process of the service and high cost of implementation of agent banking, lack of adequate public awareness and low level of customers & agents’ technology literacy (mobile phones), Lack of adequate coordination between banks and other decision making centers in agent banking; Lack of adequate infrastructural facilities in the remote area; lack of strong push from the government to promote mobile and agent banking and Lack of sufficient legal frameworks,, customer fear of risk to use agent banking service; absence of common network that links different banks and lack of confidence in relation with the security aspects, Loss of Audit Trail and Users do not trust the agent banking services. The study also tried to identify various benefits from adopting of agency banking, among the benefits overcoming geographical limitations, reduction of queues in the banking hall, enhancement of productivity in the banking industry and Reduction of paper work are the leading benefit banks in Kenya realized from the adoption of agency. The existing opportunities for adoption of agency banking are Expansion of mobile phone users, Commitment of the government to facilitate the expansion of ICT infrastructure, Increment of educated potential customer, the relative increase of the public awareness about the service are among the leading opportunities. The study suggests a series of measures which need to be taken by commercial banks so as to address various factors affecting its adoption among them: Public awareness on the use of ICT, e-commerce and e-Payment need to be raised and enhanced. The government should also legalize the acceptance of electronic receipts as a mode of transaction confirmation. This removes the past requirement of providing paper-based receipts for cash in and cash-out transactions, in doing so the desire to use the agency banking service will rise.