For Asia-wide co-op digitization and inter-operability
KUALA LUMPUR – A robust co-op sector all over Asia that can enable their members to transact digitally on equal footing with other financial service providers is the ultimate goal of the Association of Asian Confederation of Credit Unions (ACCU).
And given that the 31,752 ACCU member co-ops in 23 countries have combined 36 million individual members, there is definitely a client-base that is the envy – and therefore the target – of other financial service providers.
And ACCU has found a most capable partner in its advocacy – the World Council of Credit Unions (WOCCU) based in the United States with technical assistance from the Bill & Melinda Gates Foundation.
ACCU announced in its 2018 Annual Report: “(We) are now building the foundations to enable affordable, safe, and life-enhancing digital payments for poor and lower income populations by deploying a credit union-led shared payment platform. The vision is for credit union members to transact instantly and digitally not only with each other, but also with all other actors in the payments ecosystem in a collaborative, transparent, and inclusive manner.”
At the ACCU Forum last September 26-28, WOCCU’s Chief Executive Officer Brian Branch said: “What is WOCCU’s role in the digitization of co-ops? Our vision for the transformation of co-ops worldwide is by 2025 we want all of those CUs to offer digital solutions to members. A very ambitious goal. WOCCU’s role is to be the connector, using the mediums we have to learn the lessons – what works and doesn’t work, find partners, share experiences. There’s been a lot of progress and opportunities.”
But the panelists made it clear that such an ambitious undertaking can only be done through cooperation. Thus, inter-operability of the various systems being used by Asian co-ops must be able to inter-operate and work together.
Kurram Sikander, President of Paysys Global gave the situation: “What is inter-operability? When people hear that word, they think you need a Computer Science degree to figure it out. But it is part of our everyday lives. It is different systems working together, connecting with each other to book a flight on multiple airlines, and doing everything . . . similarly, when you make phone calls between 2 different providers, that is inter-operability. When we effortlessly send e-mails from yahoo to gmail accounts, those are two systems working together to provide seamless service. So payment systems inter-operability gives people the ability to send or receive money locally or internationally where mobile payments are mature.“
“Banks have long realized that inter-operability is beneficial, and they have to collaborate on the infrastructure but at the same time compete on the products. So instead of investing in an infrastructure, you can just collaborate on it and develop products that meet your clients’ needs,” he added.
He also advised co-op leaders: “Inter-operability also increases the utility of the credit union account. Today, co-op accounts are just savings accounts and loan accounts. For their payment needs, your members usually have to open bank accounts or open e-money wallets. But people usually prefer to have just one account that meets all their transaction needs. Inter-operability allows you to connect with multiple partners through a single transaction account, thus increasing the utility of the co-op.”
But maybe more relevant to people here who may not use mobile payments , but do use their debit cards to transact without thinking on the brand or network of their ATM . . . that is about back-end systems working transactions working together to allow transactions take place seamlessly, instantly, without any special effort from customers.
In credit unions, it is important because it creates opportunities and challenges. Challenges are infrastructure because FSI fear that competitors will take away their clients. But imagine if you want to provide bill payment services, transfer services , and purchasing from e-commerce merchants, and other FSI’s – you would have to create separate connections with all of those partners. If you have to strike separate deals with every merchant in the market, this will be costly.
More importantly, it creates digital liquidity. What happens is when you dispense a loan the first thing the customer does is withdraw everything.
What inter-operability does is that it creates options for payment s to numerous parties for everyday purchases. The funds remain in the system, which allows co-ops to make strategic investments
Paysys Global is an international advisory firm dedicated to accelerating innovation and the digital transformation of global economies. Kurram’s work in digital financial services (DFS) and payments spans over 20 years in diverse regions, including North America, Middle East, East Africa, and South and East Asia. He has led digital banking businesses, established national payment companies, advised central banks on digital payment strategies and oversight, and built strategic multi-industry partnerships to expand access to finance.