NAIROBI, Kenya, Dec 6 – Lack of suitable information systems that would support savings and credit cooperatives (Sacco) has been identified as a major hindrance towards enabling proper financial access to many Kenyans.
The Financial Sector Deepening Trust (FSD) says lack of proper IT systems that ensure generation of accurate and reliable management reports is already a problem to many Saccos and unless resolved poses a challenged in deepening financial access.
FSD Head of Rural Finance Felistius Mbole said on Tuesday that the introduction of a risk based supervision system rates a company’s strength on its obligations in the market at regular intervals is a pro-active way of preventing loss of public funds when firms go under.
“Automation will enable Saccos to become more vibrant and compete more favorably with banks and Micro finance institutions thus, ensuring that financial services in the country are more accessible to even those in the rural areas,” Mbole said.
An amendment of the Sacco Act in 2008 requires Saccos to have their services automated by 2012.
The Sacco Societies Regulatory Authority has already opted for a web-based system instead of directly linking up to the front office operations of a Sacco because the web system is secure.
The FSD program has already evaluated six solutions that Saccos can use for full automation which include core IT systems, channel banking linking to a point of sale, mobile banking as well as ability to generate reliable reports for both management and regulatory requirements.
Mbole said that Saccos play a unique role compared to banks and microfinance institutions adding that automation is meant to ensure that they are more competitive in delivering services.
“The breadth of services offered by Saccos which has more to do with mobilising savings and offering credit is an advantage they have over other financial institutions. That’s why you find that more people would rather go to a Sacco rather than a bank when they want a loan,” she said.
Mbole was speaking while handing out a certification to local IT solutions provider Fintech, to provide automation services to Saccos.
The system dubbed FinSacco will enable Sacco societies to integrate their front office operations with point of sales service ATMs and mobile banking interfaces in an effort of deepening financial access in the country.
Fintech Group General Manager Tony Mbugua said the software will enable Saccos manage their operations more efficiently and generate reliable reports for both management and regulatory requirements.
“Saccos are now adopting global best financial industry business practice and information technologies to give them an edge. Working through Kenswitch the Sacco members will have access to over 800 ATMs thereby enabling Saccos provide 24/7 banking services,” Mbugua said.
FinSacco is expected to enable Saccos ensure accountability of cash, cut down operational costs and revive stalled projects.