CHEQUING OUT
CAN SAAS HELP SACCOS AND MFIS DIGITISE ?
SACCOs and MFIs can provide financial services where others often cannot . However , they sometimes lack technology needed to innovate . Marwan Abouzeid , Senior Manager of Solutions Consulting , Finastra , tells us how SaaS can help these institutions to digitalise .
Banks cannot be everything to everyone . There are limits within formal banking environments that make it difficult for these financial institutions to serve all customers . For instance , many people seeking loans or favourable savings products struggle to provide collateral or afford the fees that would satisfy the regulations and requirements governing a traditional financial institution .
Those individuals often turn to alternatives , such as Microfinance Institutions ( MFIs ) and Savings and Credit Cooperative Societies ( SACCOs ). In fact , MFIs and SACCOs are very popular across the developing world , where Africa and Asia alone account for almost 90 % of the total number of credit unions worldwide . As of 2019 , there were around 39,600 credit unions in Africa and around 33,600 in Asia .
Both SACCOs and MFIs provide a compelling alternative to other mainstream financial service providers . Customers of these groups gain benefits they can ’ t access at traditional banks – especially in regard to lending . Many people do not meet the loan requirements of a bank , such as having an ‘ on file ’ credit history or the right personal documentation , and loan conditions can be expensive and inflexible . On the other hand , they don ’ t want to deal with moneylenders and unregulated loan sharks . SACCOs and MFIs are the trusted option for such customers .
SACCOs and MFIs are often embedded within their communities , and in the case of a SACCO , they are non-profit member-owned institutions where the individuals receiving the service are often also shareholders . They can provide micro-loans and operate on a much more personal level to offer flexible terms . These groups do not have the same Know Your Customer ( KYC ) requirements as traditional banks and they often serve customers from the informal sector who do not fit the profile required by financial services incumbents . www . intelligentfin . tech
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