Saccos at the forefront of digital disruption

Chief Executive Officer at Stima Sacco Dr Gamaliel Hassan. [File, Standard] One of the greatest business thinkers, former Apple CEO Steve Jobs, now deceased, must be an inspiration to many business leaders worldwide. To me, Steve Jobs was a mercurial leader. A significant lesson I drew from him was that any manager leading an organisation that is prone to disruption must first "begin by disrupting himself before the disruption hits his or her business". What this simply means is that a business leader must have the foresight to anticipate any disruption, digital or otherwise, before it knocks at the door of the business. For example, a decade ago, we had cabs packed along major highways and key buildings. Today, these cabs are no more. All you need is get into an app and hail a taxi to your door step. M-pesa is a revolutionary innovation that has disrupted how money is transferred and with the click of a button, anybody can access funds at the comfort of their living room. Gone are long queues outside banks. History has proved that strong economies are built on ability to make the flow of goods and services flawless. There are many other examples, but let me tackle the need for us in the Sacco movement to anticipate and prepare for digital disruption. The Sacco movement in Kenya has come of age. Stima Sacco for example has experienced phenomenal growth. In 2006, the Sacco had an asset base of Sh3 billion which has grown to the current Sh53.7 billion. During the same period, the Sacco's loan book has expanded from Sh7.2 billion to Sh42 billion. Annual revenues have increased from Sh300 million to Sh7.5 billion, while membership has grown from 6,886 to 180,000. Suffice to say such numbers supersede some established banks. Digital disruption has been at the centre of this growth for the Sacco movement. Money transfer is a particular aspect that has been affected. Just like banks, Saccos too must strive to give their customers excellent service in accessing their funds and transfer to third parties. Saccos ought to invest in mobile money transfer platforms to give customers convenience. Stima Sacco has invested in such a platform - M-Pawa - a boon to its operations. The ability to develop systems that make it easy to disburse loans to customers is also key. Gone are days when it would take a mountain of paperwork and several days to process a loan. Today, with digital systems in place, it would take a day to process a loan. But, why a day? Why not a few hours or even minutes? Continued investment in digitisation is needed. At Stima, we have put in place a comprehensive Enterprise Resource Planning (ERP) system that has made it easy for customers to deposit, withdraw, access loans, shares and dividends conveniently. As the Sacco movement wrestles with digital disruption, it would be prudent to hasten the initiative of integrating Saccos into the National Payment System which will enable them offer financial services at a more affordable and convenient manner. At the moment, Saccos are forced to pay commercial banks exorbitant commissions to transact through this system. Transactions executed by commercial banks on behalf of Saccos currently include issuing of cheque books, processing of personal cheques issued to Sacco members, Real Time Gross Settlement (RTGS) and Electronic Funds Transfers (EFTs) services where some banks demand as much as 70 per cent of the commission. This makes cost of doing business for Saccos high, a deterrent to offering good services to their customers. It is ironic that some Saccos with a big asset base and annual revenues than banks still have to bow to banks to access the National Payment System. This ought to change. I am glad that the President recently noticed this anomaly and we in the Sacco movement could soon be integrated in the system. -The writer is Chief Executive Officer at Stima Sacco

Saccos at the forefront of digital disruption

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