WOCCU, ACCU, Gates Foundation embark on ambitious project
We all want a better future and to serve our members in the best way we can. PaySys works with private and public institutions to harness the power of digital technology to build more cashless and inclusive financial systems. One of the important projects Paysys is working on is led by the World Council of Credit Unions (WOCCU) in Indonesia and the Philippines.
We are working together with co-op federations all over Asia in pushing an inter-operable payments system. Players in this project are the WOCCU, the Association of Asian Confederation of Credit Unions (ACCU), the Philippine Federation of Credit Cooperatives (PFCCO), the National Confederation of Cooperatives (NATCCO) and the Bill & Melinda Gates Foundation.
The objective of this ambitious project is to design shared digital payment systems which will allow co-ops inter-operable digital payments to their members. We are designing the infrastructure that will enable co-ops to provide their members digital services so they can make payments, remittances, purchases, and transfers to anyone who has any type of account – whether in a credit union, bank, mobile money provider or even an account in a utility company or merchant. And to make those payments anytime, from anywhere, that is safe, affordable, and fast.
Why are we doing this?
The theme of this conference is “Impact”. Co-ops play a critical role in financial inclusion.
By equipping co-ops with tools to leverage digital and offer digital services, co-ops can improve their services and maintain their relations with members and expand their reach to other segments and be part of the mainstream.
ACCU currently has 36 million individual members, 17 million of them are poor.
Through this digitization project, we will boost that by allowing co-ops to be actively involved in financial inclusion around the world.
This is piloted in Indonesia and the Philippines, we will capture lessons learned and important insights.
THE DIGITAL LANDSCAPE
- Generation Z (age 20 and below) are 32% of the global population
- They will be 23% of the world consumers by 2026
- 80% of them would trade TV for a day to keep their mobile phones
- 69% use their mobile banking apps daily or weekly
In short, the global population is getting younger and obsessed with their mobile gadgets!
Thus, the market demands :
- Quick same-day or instant service or payment clearance
- Seamless experience, meaning they pay for anything on whatever system they use
As response, there has been fast growth of faster payment systems. Governments, banks, and payment industries globally are modernizing their payments infrastructure:
- 45 live real-time payment systems
- 13 planned real-time payment systems
- 58 countries globally
Traditional financial institutions are overhauling their systems to keep pace. Market actors are collaborating – and also competing – to build shared infrastructure. They are recognizing the benefits of open-loop systems to enhance their own offerings.
LOWERING COST
Especially for co-ops, it is important to serve the low-income segments and instead going for numerous but low-value transactions. In a digital economy, financial institutions must serve the most number of people at lowest cost and high efficiency.
DIRECTIONS FOR CO-OPS
- Grow membership, target the youth
- Modernize your systems
- Lower costs by sharing pooling funds and sharing investments. No single co-op, no matter how much assets they have, can hope to compete if they are alone.
- Co-ops must connect to the broader payment ecosystem. It must be seamless.
For instance, when you take Grab, you link to the GPS, use the Grab APP, and the APP performs the transaction, without you having to fumble for cash in your bag. It is seamless.
THE REAL GOAL
The goal is not to digitize or modernize. The goal is to serve members better, which is only possible thru digitization.
Co-ops are unique because:1) your products empower, 2) you generate trust and a strong sense of community, 3) you respond to members’ needs, 4) you operate in areas unserved by most traditional players, and 5) you provide more than just financial services, but rather opportunities.
While many your members do not consider themselves technologically-savvy, they demand – or will eventually demand – convenience and accessibility. Most of their transactions are checking balances, withdrawing funds, transferring funds, and paying bills.
You think mobile technology is expensive? Co-ops in Indonesia and the Philippines have already invested to digitize. And to save costs, they have shared investments in an interoperable system. NATCCO has automated their back-end systems and provides digital channels through a shared core banking system, ATMs, and an APP called KAYA.
The shared cost enables co-ops to expand their reach and better serve their members.
Eventually, co-ops where WOCCU is present will be connected for cross-border payments.
Always keep in mind what Charles Darwin said: “It is not the strongest that survive, nor the most intelligent, but the ones most responsive to change!”
Tricia Cuna Weaver is Vice President of Paysys Global an international advisory firm based in Washington DC dedicated to accelerating innovation and the digital transformation of global economies. Tricia has over 12 years of experience in digital financial services (DFS), digital payments, and financial inclusion. She has worked across 21 different markets globally as an advisor to regulators, government agencies, multilateral and bilateral organizations, banks, payment services providers, and other financial system actors to leverage digital technologies for more inclusive economies.