By Azael Masese
Co-operative Bank of Kenya is the most preferred commercial bank Saccos turn to for operational efficiency and customer convenience.
Consequently, Co-operative Bank generates more income by partnering with Saccos compared to other commercial banks; and the reverse is true.
According to the Sacco Supervision Annual Report, 2021, partnership areas include Automated Teller Machine, Agency banking and cheques.
Automated Teller Machine (ATM)
Automated Teller Machines are alternative delivery channels that are provided by financial institutions for operational efficiency and customer convenience.
Due to lack of the national payment system, Saccos are unable to provide ATM services hence depend on commercial banks.
However, since Saccos cannot directly access the national payment system, they are unable to provide ATM services without partnering with the commercial banks.
In this partnership, Saccos are required to open settlement accounts with commercial banks where their interbank transactions are settled on behalf of their members.
During the year 2021, the number of Deposit-Taking (DT) Saccos that were connected to ATMs services remained the same as 2020. One Sacco, however, acquired its own internal ATM to offer financial services to its members, instead of the physical tellers.
However, such internally owned ATMs offered by Saccos are limited to internal transactions only as they are not connected to local or global payment networks, and thus the Saccos with own ATM have also partnered with commercial banks for the same services.
“Cooperative Bank through Sacco Link remains the preferred service provider for DT Saccos in enabling their members access ATM services,” the report states.
During the year under review, the number of DT Saccos providing automated tellers access through Sacco Link remained unchanged at 113 DT Saccos.
This underscores the significant role that the Cooperative Bank plays in this sphere.
“Though the number of DT Saccos that have not entered arrangements with commercial banks to enable their members access ATM has reduced to 59 DT Saccos, this is still a high number given the ease of access and convenience that the use of ATM offers to members,” the report further states.
Agency Banking
Another critical financial service where Saccos and commercial banks come together is agency banking.
According to the report, Saccos continued to provide agency banking services for commercial banking institutions through individual approvals granted by the Authority.
The main agency banking services offered by Saccos as agents of commercial banks include withdrawals, deposits, statements, and other enquiries.
“The number of approved DT Saccos allowed to provide agency banking for commercial banks remained 65 DT Saccos in 2021,” the report indicates.
According to the report, 45.9 per cent of Saccos provided agency banking on behalf of Co-operative Bank.
Equity bank was at 28 per cent as KCB, Family Bank, Post bank and ABC Bank followed in a descending order.
Non-Withdrawable Deposit-Taking (NWDT) Saccos have equally ventured into the business of providing agency banking services on behalf of commercial banks, principally as a means of generating alternative revenue streams.
During the year 2021, SASRA approved 13 NWDT Saccos to provide agency banking services on behalf of Equity Bank, Cooperative Bank and KCB Bank Ltd. There were 185 NWDT Saccos in the country in 2021.
Co-operative bank topped the charts with 6 followed by Equity bank at 5 and KCB with 2.
Cheques
Despite the introduction of digital payment systems such as the Real Time Gross Settlement (RTGS), cheque usage is still one of the most popular payment methods in the financial sector.
For Saccos, however, they are not legally authorized to issue third-party cheques in their own names since they are not members of the cheque clearance and settlement system in the country, the preserve of only the commercial banks.
Consequently, DT Saccos have over the years partnered with commercial banks to offer cheques to their members.
In 2021, according to the report, 82 DT Saccos partnered with commercial banks for the provision of cheque services to their members, an increase from 79 DT Saccos reported in 2020.
Out of these, 60 Saccos partnered with Co-operative Bank, representing 73 per cent.
Co-operative Bank leads commercial banks as preferred Sacco partner
By Azael Masese
Co-operative Bank of Kenya is the most preferred commercial bank Saccos turn to for operational efficiency and customer convenience.
Consequently, Co-operative Bank generates more income by partnering with Saccos compared to other commercial banks; and the reverse is true.
According to the Sacco Supervision Annual Report, 2021, partnership areas include Automated Teller Machine, Agency banking and cheques.
Automated Teller Machine (ATM)
Automated Teller Machines are alternative delivery channels that are provided by financial institutions for operational efficiency and customer convenience.
Due to lack of the national payment system, Saccos are unable to provide ATM services hence depend on commercial banks.
However, since Saccos cannot directly access the national payment system, they are unable to provide ATM services without partnering with the commercial banks.
In this partnership, Saccos are required to open settlement accounts with commercial banks where their interbank transactions are settled on behalf of their members.
During the year 2021, the number of Deposit-Taking (DT) Saccos that were connected to ATMs services remained the same as 2020. One Sacco, however, acquired its own internal ATM to offer financial services to its members, instead of the physical tellers.
However, such internally owned ATMs offered by Saccos are limited to internal transactions only as they are not connected to local or global payment networks, and thus the Saccos with own ATM have also partnered with commercial banks for the same services.
“Cooperative Bank through Sacco Link remains the preferred service provider for DT Saccos in enabling their members access ATM services,” the report states.
During the year under review, the number of DT Saccos providing automated tellers access through Sacco Link remained unchanged at 113 DT Saccos.
This underscores the significant role that the Cooperative Bank plays in this sphere.
“Though the number of DT Saccos that have not entered arrangements with commercial banks to enable their members access ATM has reduced to 59 DT Saccos, this is still a high number given the ease of access and convenience that the use of ATM offers to members,” the report further states.
Agency Banking
Another critical financial service where Saccos and commercial banks come together is agency banking.
According to the report, Saccos continued to provide agency banking services for commercial banking institutions through individual approvals granted by the Authority.
The main agency banking services offered by Saccos as agents of commercial banks include withdrawals, deposits, statements, and other enquiries.
“The number of approved DT Saccos allowed to provide agency banking for commercial banks remained 65 DT Saccos in 2021,” the report indicates.
According to the report, 45.9 per cent of Saccos provided agency banking on behalf of Co-operative Bank.
Equity bank was at 28 per cent as KCB, Family Bank, Post bank and ABC Bank followed in a descending order.
Non-Withdrawable Deposit-Taking (NWDT) Saccos have equally ventured into the business of providing agency banking services on behalf of commercial banks, principally as a means of generating alternative revenue streams.
During the year 2021, SASRA approved 13 NWDT Saccos to provide agency banking services on behalf of Equity Bank, Cooperative Bank and KCB Bank Ltd. There were 185 NWDT Saccos in the country in 2021.
Co-operative bank topped the charts with 6 followed by Equity bank at 5 and KCB with 2.
Cheques
Despite the introduction of digital payment systems such as the Real Time Gross Settlement (RTGS), cheque usage is still one of the most popular payment methods in the financial sector.
For Saccos, however, they are not legally authorized to issue third-party cheques in their own names since they are not members of the cheque clearance and settlement system in the country, the preserve of only the commercial banks.
Consequently, DT Saccos have over the years partnered with commercial banks to offer cheques to their members.
In 2021, according to the report, 82 DT Saccos partnered with commercial banks for the provision of cheque services to their members, an increase from 79 DT Saccos reported in 2020.
Out of these, 60 Saccos partnered with Co-operative Bank, representing 73 per cent.
