Over time, Saccos are increasingly popular as a means of accessing financial services in the country. They are member-based entities which run on the principle of bringing resources together before providing affordable credit.
Like other financial institutions that include microfinance, commercial banks and mobile lenders, they work day and night towards maximizing profit. Saccos have no option other than making every effort to continuously and steadily serve their members effectively; and on the other hand; get some profits as well.
Saccos need funds to finance daily operations, do projects that result in their growth, and ensure their members are served to their satisfaction. By the end of the year, they require to report something good to the members, which could be the profits they made. In this regard, they need to consider and re-evaluate their activities and see to it they are generating good incomes like other financial institutions.
It is true that sometimes Saccos are limited to the income generating projects they may engage in as per their regulators. It is therefore important to understand their internal potentials and explore them.
Economies of scale
They can explore on building a strong membership. The success of any Sacco is strongly dependent on the strength of its membership base. When a Sacco has a strong membership base, it means it will manage to mobilize more savings, borrowing opportunities and any other service they offer.
The products they have will be consumed by the members and the same members will borrow, thus gaining through processing fees, interest incomes or any other fees attached to these processes. The business brought about will definitely translate to high profits.
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Sometimes the cost of a product is no longer an issue to members as they tend to value more how best they obtain the product or service. Cheap interest rate no longer sells; what matters is how best you present the product. Saccos can invest in packaging their products through creating awareness and making them as attractive as possible.
The members should be offered competitive interest rates on savings and loans, besides excellent customer service that maintains member dignity at all times. This would help to attract, retain and reduce membership dormancy and withdrawals that reduce on Saccos’ assets.
In the world we are living in today, customer needs, taste and preferences keep on changing from time to time. This is occasioned by the different internal and external economic and environmental factors both locally and globally. Saccos need to up their game by offering a variety of well thought out and designed products and services to give them a valid reason to stick around.
Flexibility
One of the challenges Saccos have is giving the same products for a long time that forces their members to switch to other financial institutions with flexible and convenient all-season products. These Saccos fail to understand that with a variety of products, they can generate additional revenue streams and increase the value that they can give.
In addition to offering savings and credit facilities, Saccos can explore other fields within their regulation to stop them from running to other institutions. By so engaging such activities, they increase the value to members and generate more revenue. Having several products is very important since it reduces dependency on a single product, and in case a certain risk occurs, there is a fallback position.
Most of our Saccos are slow in embracing the current technology that has a cost implication on the other side. They have been engaging manual processes that sometimes are very tedious and expensive. They tend to overlook technology but yet they want to advance.
For any Sacco that wants to make profits and give the best to its members, technology enhancement should be strategy number one. This is because technology helps to streamline operations, enhance customer experience, reduce costs, and increase revenue.
Automation and costs
Automating such processes as credit processing, account opening and account management will reduce the risk of errors and fraud, which would translate to increased profits. Technology enables Saccos to provide convenient and accessible services.
Current technology in Saccos helps in data analytics. It is through this that varying expectations and needs can effectively be managed.
Technology enables Saccos to be competitive not only with other Saccos but with other institutions that offer similar services.
As Saccos are growing and are adopting new structures, it would be prudent for them to adopt a system that manages their costs that would be responsible for cutting down unnecessary expenses.
Most established financial institutions have laid down strategies on cost management, which are reviewed from time to time.
Saccos can adopt such systems and strategize to ensure proper asset management, optimal asset utilization, reduction in idle resources, and improvement in return on investment.
If they could have a laid down plan, they would ensure they allocate resources and expenses effectively. Managed costs ensure there are no wastage and unnecessary spending.
Besides meeting the members’ needs, Saccos need to know they are in business and, I quote: ‘Watch the cost and the profits will take care of themselves.’
By Dorcas Nyambura Ndegwa
Email: dornamvua@gmail.com
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