World Bank's Center of Excellence on Cooperative Financial Institutions (CoE-CFI)

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Role of Multilaterals in digitization of CFIs and business models

[Question by Peter Knaack]

What role can CGAP and other multilaterals play in this area beyond technical work on regulatory obstacles/enablers? Would financial coops appreciate advice on business models, or even IT platform solutions?

  • [Answer posted on behalf of Pedro Xavier Faz  - CGAP]

    Technical advice for technology  solutions is desirable, but CGAP or other multilaterals might not be the best providers of such advise – technology changes quickly, and tech advise is best when tailored to the local environment, the capabilities of the firm, the business model, etc.  Entities like CGAP and other multilaterals cannot provide detailed, tailored technical advice to individual firms, nor that is their goal.  But they can share knowledge at the level of business models, technology “blueprints”, or roadmaps that can orient actions taken by coops.  It’s important for institutions to rely on the provision of local technology vendors that can provide not only the solutions, but ongoing support, technical/business advice, etc.  It is also important for institutions to develop internal technology-management capabilities that enable them to procure services efficiently, make the right business/technology tradeoffs, make the right investments with medium/long term horizons, etc.

  • [Answer posted on behalf of Albert Boogaard - Rabo Foundation]

    Fully agreed with Xavier, also based on our own experience with connecting Rabobank ICT and data knowledge to SACCO’s. The digital maturity level of financial cooperatives is highly diverse and often related to the size of their operations. We do see a clear need at smaller and medium sized financial coops for support related to digitisation and effective use of data to improve operations and services to members. In our experience providing elementary workshops on business translation, digitisation and analytics as well as checklists for procurement of systems definitely adds value, as long as the financial cooperatives stay in the lead.  Developing and improving these materials could be taken up by multilaterals and foundations.

    Especially for uniform groups of smaller to medium sized cooperatives multilaterals could go one step further and think of supporting the emergence of systems that are tailored to these cooperatives needs, allowing for uniform data standards,  scalable support programs and product development such as credit scoring and centralised forms of funding and regulation. I found the Kenya initiative that was presented very inspiring.