Why SACCOs Should Consider Neobanking

Turning SACCOs into neobanks will help them deal with industry challenges and build new customer bases.

A neobank is a financial institution that gives customers a cheaper digital-only alternative to traditional financial institutions such as banks and SACCOs.

While speaking at the CIO Africa Saccotech Forum, Cynthia Wandia, CEO & Co-Founder, Kwara stated that by turning into neobanks, SACCOs would overcome challenges facing them thus improve their overall efficiency as well as attract young people who prefer digital experience.

“Neobanking emerged in response to the challenges facing banks, which echo those facing SACCOs today. Turning SACCOs into neobanks will help them lower operational costs which pass savings to members. The shift will also allow for compliant, granular reporting and analytics to help in decision making,” she said.

Cynthia added that transforming SACCOs into neobanks will allow rapid product innovation which will help generate a new customer base.

Moreover, according to Cynthia, digital-only SACCOS can take advantage of technology to offer personalised services to its members.

“Personalisation and ease of access will grow member activity and trust. SACCOs will be able to offer products that meet individual needs,” she stated.

Some of the defining features of neobanks are the use of technology to personalise services and reduce operational costs. They are also able to launch features more quickly. Whereas it may take up to one year to install or implement a traditional system, in that span of time, a neobank will have introduced credit cards, debit cards and other products.

Digital-only SACCOs, Cynthia said, can take advantage of API integrations to drive unique partnerships for the benefit of members such as managing credit risks and offering third-party payment channels like credit cards.