CHEQUING OUT
SACCOs are not only small rural operations , but some have also reached massive scale and popularity . For example , Kenya National Police DT SACCO currently has over 52,000 members . These organisations have aided many small businesses and entrepreneurs in informal economies to get started through funding options .
The digitisation gap
However , these organisations risk losing ground and customers . Aggressive digitisation by banks , telco operators and FinTech start-ups is lowering the barriers to financial services . It ’ s not ( yet ) a wholesale shift , as many people still find their options very limited . However , customers can now enjoy more access through the conveniences of digital services , and MFIs and SACCOs , which operate on thinner margins , are starting to feel the pinch .
They can then use these solutions to design and deploy loan and savings products that work for their customers .
The slower adoption of digital services by these groups may have a long-term impact on their popularity . Many members that previously used such groups for most of their financial needs are starting to move to other providers for convenient day-to-day transactions , and only use MFIs or SACCOs for specific requirements such as lending .
Efficiency and access lie at the heart of the problem as most MFIs and SACCOs groups still rely heavily on paper-based processes , costing them money and limiting their reach with customers . It also amplifies their risks : with limited liquidity , defaulting customers can quickly make it hard to maintain
Marwan Abouzeid , Senior Manager of Solutions Consulting , Finastra operations . Additionally , complying with regulations is much more challenging .
This , combined with a generally riskier customer base , can put a lot of pressure on their financial resources . And since many of their potential customers are in rural areas , it ’ s expensive to enrol new ones .
Imagine what a SACCO or MFI agent can achieve if they could do all of their customer onboarding on the road with a tablet device .
Helping with SaaS
Previously , traditional financial institutions could not affordably and effectively serve those outlying customers . Yet now , SACCOs
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