Members of Lamu Teachers Sacco can now access trade finance facilities and make payments using cheques following a partnership between ABC Bank and the Sacco. The deal will see ABC Bank provide cheque clearing services and other commercial bank products to the Sacco.
Due to regulatory policy, Saccos do not offer certain products such as current accounts, trade finance, cheque books, Real Time Gross Settlement (RTGS) and Electronic Funds Transfers (EFTs). This forces Sacco members, especially those operating businesses, to turn to commercial banks for these services. Consequently, Saccos register reduced share of wallet following stiff competition from commercial banks and deposit-taking microfinance institutions.
This partnership will enable Lamu Teachers Sacco – which has five branches across Lamu County – to overcome that regulatory obstacle to begin offering such commercial bank products to its members through ABC Bank. This will provide the Sacco members access to the national payments system, increase ease of transactions and improve efficiency of doing business.
“In particular, the current account and cheque clearing solution that we are launching today will open more possibilities to Lamu Teachers Sacco members. With the current account, members can now manage and plan their finances better by separating personal and business accounts. This will help them enjoy greater ease in banking transactions”, said ABC Bank’s Relationship Manager for Saccos, Mr. Wilson Asena during the launch.
The current account product will enable Sacco members prove their credit worthiness to access credit facilities, while the cheque clearing solution will allow them make payments using cheques which will be cleared by ABC Bank, thus connecting them to the national payments system. In addition, the cheque clearing solution will allow Sacco members accept cheque payments in to their accounts.
Both the current account and the cheque clearing solution are a game changer for the Sacco because the law does not allow Saccos to operate current accounts or issue cheque books. However, ABC Bank will now act as a bridge for the Sacco members to enjoy the benefits of a bank through their Sacco.
Mr. Asena added: “This solution is part of ABC Bank’s plans to empower the cooperative sector in Kenya to become more competitive and unlock the entrepreneurial potential of more Kenyans through enhanced access to financial services”.
“We are now able to satisfy the demands of our members who have historically maintained multiple accounts to enable them access all the services they need under one roof. We will also aggressively pursue new markets and opportunities which have been created for youth and women in our county’’ said Lamu Teachers Sacco CEO Mr. Michael Kirui, adding that the partnership will enable the Sacco to catalyse enterprise growth by providing tailored products that satisfy customer expectations.
ABC Bank has entered into similar partnerships with other Saccos such as Fortune, Bingwa, Capital, Imarika and Unaitas, as well as Postbank, to enable them offer a wider range of services beyond what they are mandated to offer on their own.