Embracing technology is no longer optional for saccos that are keen on remaining competitive and profitable

By George Gichuki

The era of digitization is already with us.  Globally and locally, organizations are embracing digitization as they focus more onbeing efficientand profitable.   Processes or procedures that would take long to be performed because of inefficient manual systems are now being undertaken fast and cost effectively, courtesy of digitization.  It is also through digitization that we have been able to deepen the financial sector in Kenya, mainly by embracing mobile banking. The good news is that savings and credit co-operativesocieties (saccos) in the country have not been left behind in the quest to go digital. Most of them have invested heavily in information   communication technology (ICT) in order to enhance service delivery and product development.  ICT in today’s business is a strategic enabler, although it should be accompanied with investment in appropriate risk mitigation measures.

The Sacco Societies ( Deposit Taking Sacco Business) Regulations 2010 under  Reg. 3 (b) provides that deposit taking saccos must maintain an information management system  that is capable of performing and accounting for all transactions, besides providing the minimum reports that are required by the Sacco Societies Regulatory Authority ( SASRA).   The system enables the saccos to achieve operational efficiency.  By embracing technology, SASRA has been able to regularly measure the performance trends in the deposit taking saccos.  In addition, the existence of an up to date central financial data repository for all licensed deposit taking saccoshas enabled SASRA to conduct evidence based research that has informed the formulation of appropriate policies.

TOWERING: Mentor Sacco headquarters in Murang’a town. The leading sacco has rolled out a mobile banking product branded Mentor Quickcash in its quest to go digital.

By going digital, saccos have become more innovative in their business. The path of technology in business means doing something different, smarter or better. Ultimately, this yields better results in respect to value, quality and productivity.  In that regard, the saccos that invest in technology and choose the path of innovation are bound to increase their market share, financial performance and overall competitiveness.

Financial inclusion

Rapid development and extension of digital platforms as well as digital payment solutions provide the speed, security, transparency and cost efficiency that are needed in order to enhance financial inclusion. The broader access to and participation in the financial system helps in reducing income inequality,  creation of more jobs, acceleration of consumption and an increase of  investments in human capital.


The prudential standards and operational regulations by SASRA are designed to enhance sound business practices across the sacco sub-sector in the country. Consequently, this enhances the competitiveness of various players in the said sub-sector.   There is cut throat competition in the deposit taking market segment which coupled with the fast changing business environment, demands a paradigm shift in the way that players conduct their business.  A number of leading deposit taking saccos have therefore re-invented themselves in order to remain competitive. This has made   compliance a natural outcome of properly aligned business strategies. It is no longer tenable for these saccos to continue banking on offering high interest rates on members’ deposits as a competitive edge, or over-relying on external borrowing to fund lending activities.

All in all, across the divide, there has been an increase in the business risks arising from digitization as well as opening of the common bonds.  SASRA has therefore been undertaking a review of the risk based supervisory policy with a view to enhancing and entrenching risk management culture across all layers of the organization.

New normal

By and large, the onset of the Covid-19 pandemic has driven saccos to embrace digital products.  One of these products is mobile banking.  In that regard, sacco members are able to perform various transactions using their mobile phones like depositing and withdrawing cash as well as applying and receiving loans without having to visit the branches physically.  Going cashless has been identified as an effective way of curbing the spread of the deadly coronavirus.  Innovative and forward looking saccos are therefore bound to align their strategies with the business environment that has been brought about by the ‘new normal.’



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