Co-op Tech will enable Saccos to share core banking services to help them expand market reach and save cash. The technology firm will cushion Co-operative Societies struggling to acquire the best Information Communication Technology (ICT) tools to deepen productivity by sharing.
The shared platform is embedded with a shared fund management platform that supports inter-Sacco lending and cross-Sacco funds transfer, with the ability to hook up Saccos to the National Payment Systems that will enable seamless transfer of funds.
Co-operatives Cabinet Secretary Simon Chelugui said the platform accessible to all co-operatives is expected to enhance competition in the sector. SEE RELATED STORY HERE
“A good number of Saccos owing to lack of strong financial muscle are unable to install current ICT models but through the new platform they will be able to access crucial services and more so expand their market share,” said Chelugui. “We expect other players in the industry will also launch similar. Government will therefore come in handy to ensure the process is well regulated.”
The facility will be run by Cooptech Limited, a financial technology-led company owned by the Co-operative Alliance of Kenya (CAK) and individual Co-operatives Societies through shareholding. It will help in upscaling and digitization of co-operative financial services.
“The new facility seeks to make affordable core banking services for many co-operatives that have been struggling to raise a huge budget to procure and maintain versatile transaction systems to deter cybercrime,” said Mr. Chelugui.
Saccos will own the new platform by buying 65 shares, the same way they own shares in the Co-operative Bank of Kenya, while 35 percent of the balance will be open to individual members whose co-operatives are members of the platform.
“One thing that this system will do is to assure the security of depositors’ funds in co-operative societies and Saccos so that we can assure every depositor of their safety of money whether in a Sacco or co-operative,” he said.
Chelugui termed Saccos as the best institutions to promote a saving culture for socio-economic development in the country.
“The national government’s bottom-up economic model is best exemplified by the co-operatives business model that taps its strength from their members. Mobilization of those at the bottom of the pyramid can be effectively done through co-operatives,” he noted.
Daniel Marube, CAK’s Chief Executive Officer, noted that investing in cyber security is expensive.
“When co-operative societies come together through the Co-op tech platform, we will be able to employ the most expensive technology and experienced people to protect members’ money,” he said, adding that “every year, Saccos remit pay for expensive digital licenses. With Co-op Tech platform they will be paying a one off amount in terms of shares. This will save them billions of shillings annually.” He said the platform makes technology affordable and thus enables co-operatives to attract the youth.
