Before the pandemic, most members of Siraji Savings and Credit Cooperative, or “SACCO” as credit unions are known in Kenya, had not yet embraced technology. Only 18% of their 10,000 members were using mobile or other digital platforms. Fast forward to November 2020—and we find Siraji CEO Felix Ochieng reporting that over 80% of his SACCO’s members are now patronizing various digital mobile platforms for their daily transactions.
Headquartered about three hours north of Nairobi, Siraji SACCO is an open-bond credit union with about 10,000 members that include poultry and dairy farmers, hoteliers, small and medium enterprises (SMEs) and microfinance groups. Like most financial service institutions across the world, it is currently witnessing the rapid evolution of customer needs that have created these new digital habits.
Throughout the COVID-19 pandemic, many consumers have rapidly adopted new or existing digital channels to conduct their normal routines from the safety of their homes, and in accordance with local stay-at-home measures. SACCOs in Kenya, regardless of size, have long been aware of their need to embrace digital transformation to keep up with the changing environment, but the pandemic has added increased urgency and incentives. Digital transformation has been a component of World Council of Credit Unions’ (WOCCU) partnership with Siraji over the years, including through the current Technology and Innovation for Financial Inclusion (TIFI) project funded by USAID’s Cooperative Development Program, which aims to increase finance for small and medium enterprises.
Supporting members in going digital
Before this year, Siraji had already invested in developing a diverse set of digital channels, but the uptake by its members was low. When Siraji members suddenly needed to access account services digitally, Siraji contacted them directly through a coordinated campaign of SMS messages. Siraji also sent memos to branches that emphasized the importance of minimizing physical branch operations and encouraging members to transact using digital and mobile platforms. Now, Ocheng says Siraji SACCO members have turned to digital channels for both transactional and learning needs, with uptake across a diversity of digital channels. As of November 2020, Siraji SACCO reported that:
- 61% of their members are using their mobile platforms to deposit funds into their accounts;
- 74% are applying for loans using a recently developed mobile loan application where members can apply for loans via mobile phones; and
- roughly 20% and 19% are using their mobile platforms to pay bills and buy communication airtime, respectively.
Siraji emphasizes the need for building the digital literacy of members, and for creating a reliable digital environment in which members can trust the institution to protect against cybercrime and abuse of their data. It also points to the need to address not only member-facing platforms, but also how internal processes and controls can be improved through new platforms or automation. Improved internal operations and core banking systems can also facilitate SACCO staff to work remotely as needed.
While the rate of adoption is certainly impressive, not all community-based SACCO members are immediately ready for digital transformation. Siraji SACCO, despite the impressive growth experienced in the previous month, still has about 20% of its members who are not using any part of its digital platform. These members are more likely to be elderly, semi-literate, rural and/or women. They are unable to access mobile devices, have lower digital literacy and lack the network connectivity to actively patronize digital financial services. Digital services need to consider how to reach these members with tailored digital literacy campaigns, digital platforms that can function in low connectivity settings or solutions like WOCCU’s Field Officer Banking methodology to extend mobile agent networks.
The pandemic is continuing to accelerate SACCO adoption of technology. This investment in digitization can also accelerate SACCOs out of this crisis. While those SACCOs that are not yet well adapted to the digital world may find it more difficult, the current crisis offers the opportunity to make necessary and fundamental changes to the way their businesses operate. WOCCU’s TIFI project identifies technological opportunities and resources to help SACCO businesses understand evolving member and customer needs so that SACCOs can prepare for the future and respond to signals of recovery—with digital transformation a key ingredient in SACCO business resilience.