Why SACCOs Need Digital Transformation

In the realm of financial services, the winds of digital transformation have been sweeping across industries, propelling them into a new era of efficiency, accessibility, and innovation. It is something Patrick Kiburi Kilemi, Principal Secretary (PS) in the Ministry of Co-operatives and Micro, Small & Medium Enterprises (MSMEs) Development, State Department for Cooperatives, highlighted at The Vertical. The Redington event focused on the digital transformation of BFSIs and SACCOs.

The cooperative (SACCO) sector, a cornerstone of Kenya’s financial landscape, stands at the threshold of an exciting journey towards harnessing the potential of technology. This paradigm shift not only steers the sector to the next level but also ushers in an entire universe of opportunities and challenges that demand our attention.

Unlocking New Avenues through Customer Obsession

The concept of customer obsession has emerged as a catalyst for transformative growth. It empowers SACCOs to penetrate new markets, armed with innovative products and services tailored to the evolving needs of their members. “Initiatives like the Hustler Fund are made possible by existing platforms such as M-Pesa and KCB. These facilitate seamless financial interactions for more than 22 million Kenyans. An astounding 7 million Kenyans borrow and repay daily through the Hustler Fund with technology playing a pivotal role in determining borrowing limits. The potential harboured by technology and innovation is nothing short of enormous, leaving us to ponder where the realm of IT will lead us,” said Kilemi.

Seamless Experiences and Enhanced Productivity

Two things about digital transformation are that it promises an intuitive customer experience and heightened employee productivity. An intricate process. Take the SACCO sector that reveals its magnitude. “The cooperatives sector has registered over 28,000 SACCOs, among them marketing, transport, housing, investment and SACCOs with a membership base of 14 million Kenyans. A staggering 12,000 registered SACCO-sub sector also contributes to this dynamic space. Accumulated deposits are over $6.9 billion with an asset base of over $10.4 billion. SACCOs account for approximately 30 per cent of Kenya’s annual savings,” stated the PS.

Embracing digital transformation has propelled the sector into the realm of unparalleled efficiency. The convenience of accessing services from any corner of the nation amplifies SACCOs’ reach from mobile phones to the farthest rural areas. The fusion of technology and accessibility is a boon. One that encourages a cohesive financial ecosystem that empowers the masses.

Even then, SACCOs cannot overlook fraud and cybercrime. Cybersecurity demands continuous review of internal control systems and risk management processes all while using ICT and adopting robust data protection practices. The clarion call to heed the Data Protection Act (2019) resonates strongly.

Building Bridges: Partnership, Collaboration, and Progress

Initiatives like hotspot launches and innovation hubs in every constituency would illuminate the way forward. Not only would it turn around the low adoption of technology in the rural areas, but it would also certainly usher in opportunities for the youth and growth across sectors.

While we are ceaselessly compared to international examples like South Korea, Singapore, and Malaysia urging us to reevaluate our strategies and benchmarks, perhaps it is time for some ICT introspection. “60 years later, have we effectively harnessed technology to its fullest potential? Can we expect similar outcomes if we don’t emulate their approach?”

As the SACCO sector embarks on this digitally transformative journey, the digital dawn offers both challenges and opportunities. Collaborative efforts between the government, regulatory bodies, and industry stakeholders must connect to create a solid working environment. Legal frameworks should evolve dynamically, aligned with the aspirations of the people. How else, Kilemi asks, would we truly harness the power of the digital economy?