Saccos must embrace tech for expand inclusion

In Kenya’s economy, Savings and Credit Cooperative Societies, commonly known as Saccos, have emerged as formidable players in the financial sector. With over 14 million members and deposits above Sh1 trillion, Saccos contribute more than 30 per cent of national savings. 

Saccos play a crucial role in financial inclusion by improving members’ livelihoods at the grassroots level. They have been a catalyst for economic empowerment, lifting countless families out of poverty and directly contributing to the achievement of the Sustainable Development Goals. At the core of Saccos is their mandate to offer loans for education, housing, agriculture and business ventures, among others, at lower interest rates compared to other financial institutions.

Recognising the potential of Saccos, the Sacco Societies Regulatory Authority has shown remarkable foresight as the regulatory framework governing Saccos has evolved to embrace digital transformation. The Sacco Societies (Non-Deposit Taking Business) Regulations, 2020 provide space for Saccos to leverage digital platforms, allowing the establishment of digital Saccos, subject to written approval from the Regulator. They also emphasise the importance of robust management information systems. By integrating technology into their services, Saccos enhance transparency and convenience for their members.

Saccos have embraced technology with open arms. Many now offer mobile banking apps, allowing members to check balances, apply for loans and conduct transactions conveniently. Saccos that have adopted technology have reported increased efficiency, reduced risk of fraud and improved member satisfaction. 

Reduce operational costs

This technology adoption is also key to attracting a youthful membership. According to the 2019 Census, 35.7 million Kenyans (75.1%) are below 35 years. This young population needs products customised to their needs. This is the opportunity for Sacco leaders to offer tailored financial solutions to this potential market, ensuring continuity of membership. 

To accelerate digitisation, Saccos need to collaborate with fintechs to provide solutions that cut through endless physical transactions and bureaucratic processes, while availing cost savings and security. Smaller Saccos can leverage third-party integrations to expand their services. 

The next crucial step for Saccos is to embrace shared services platforms. By pooling resources and technologies, they can significantly reduce operational costs while improving efficiency in service delivery. This collaborative approach would allow even smaller Saccos to offer superior services, lultimately benefiting millions of Kenyans.

The potential for future growth through technology is immense. Artificial intelligence will revolutionise credit scoring, making loan approvals faster and more accurate. Blockchain technology will enhance security and transparency in transactions.

Mr Munene is the Group Managing Director of KUSCCO Ltd