M-CHAMA: A Revolutionary Product by Postbank

Bank launches a product for savings groups (chamas) as it aims to mobilize more savings from Kenyans in line with its mandate

By George Gichuki

Savings groups (popularly known as chamas in Kiswahili) are effective vehiclesfor collecting money from a group of people who have come together in order to achieve certain socio-economic goals. Indeed, over the years, savings groups (chamas)have proved to be a viable path to financial freedom.

Most savings groups in Kenya were started by women residing in the rural areas. They were avenues for saving money. In the early days of this model, majority of them operated as merry-go-rounds where members would contribute money
to buy household goods such as utensils for one another. Additionally, the money contributed would be given to one member in lump sum during the group’s weekly or monthly meetings.Members exercised their own discretion while utilizing the money received but mainly, it was used in establishing micro enterprises, buying household goods and food, payment of school fees or replacement of thatched roofs with corrugated iron sheets among others.

However, in recent years, many savings groups have graduated from merry go round outfits to investment clubs with clear management structures and strategies as well as internal borrowing mechanisms. Most of these clubs raise hefty amounts of money which is channeled to major income generating activities like investing in real estate and stocks. By and large, they have assisted in uplifting the living standards of their respective members.

Mobilizing savings
Established in 1910, Postbank is primarily engaged in mobilization of savings for national development. Recently, in fulfillment of this mandate and as a response to the needs of its customers, the solid organization launched a mobile banking product for savings groups dubbed M-Chama. The innovative product allows members in a formal group to make deposits into their joint account using M-Pesa. In addition, these members can request for
loans from their group account which are in turn sent to their individual or M-wallet accounts upon approval by the group’s designated signatories. Moreover, the mobile banking product permits signatories of a given savings group (chama) to check their account balances.

The colourful event kicked off with members of the public registering and interacting with the Postbank staff who were keen on building relationships with them. In the process, the bank won a good number of new customers eager to save their hard earned money. The bank developed M-Chama with the technical support from Financial Service Deepening –Kenya (FSD Kenya). The decision was informed by the need to have an ideal product for different savings groups. The product would be based on the groups’ diverse needs.

Attributes
Postbank was keen on developing a product that would meet most (if not all) of these needs. One of the key attributes of this product is that it guarantees security of
the members’ savings and instant transfer of the same whenever a need arises.MChama
also allows the group members to use their mobile phones in making savings and withdrawals. It is very ideal for the customers residing in the far flung and remote parts of the country where one has to cover long distances before accessing a bank. Consequently, the product will go a long way in deepening the country’s financial sector.

According to Postbank’s Managing Director, Ms. Ann Karanja, the bank has always endeavoured to come up with innovative and efficient ways and means of accomplishing its mandate.To that end, it has recently rolled out highly successful financial literacy campaigns throughout the country, besides reaching out to the unbanked and under banked populace by
developing innovative products that are technologically driven.

“We are keen on enabling as many Kenyans as possible to have access to formal financial
services and in that vein, we have developed an array of savings products for all ages and
income groups,” says Ms. Karanja.

The launch
Speaking during the launch, the chief guest, Mr. Nicholas Mac’Botongore, the Ministry
of Labour and Social Protection Assistant Director in charge of Social Development, emphasized that savings is a precursor for wealth creation, financial freedom and
peace of mind.

Financial access has been identified as a catalyst for economic growth and
poverty alleviation both in developing and advanced economies. Postbank has therefore continued to execute its mandate of inculcating a savings culture among Kenyans by developing friendly and technologically driven products to meet the ever changing needs of its customers.M- Chama is an addition to the bank’s mobile and internet banking platform. Mr. Botongore emphasized that Postbank plays a critical role in enabling Kenya to meet her development goals.

The launch of M-Chama will go a long way in ensuring that small groups contribute
positively towards the advancement of their income status, while defying the risks associated with physically handling cash. Going by the trends of savings groups (chamas) in the country, specified amounts of money are contributed by the members on a regular basis – including payments of the loans advanced to them plus the interest accrued.M-Chama will therefore come in handy while saving any surplus money belonging to a savings group.

Postbank recognizes and appreciates the technical support of the World Savings Banks Institute (WSBI) among other partners in the development and roll out of this innovative product.

Brand heritage
The M-Chama account is open to formal and informal groups. In order to support the groups, there is no joining fee. The platform is therefore expected to significantly improve the banking experience for individuals with group savings as they are not required to physically visit the bank’s branches or automated teller machines (ATMs) in order to transact. The launch heralded the dawn of a new era for the only bank in the country with a mandate of mobilizing savings. It was another feather in its cap and a plus for its rich brand heritage.