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Responding to Demand for Credit Union Digitization in Indonesia

This post written by Fr. Fredy Rante Taruk, Chairman of CU Sauan Sibarrung in Jakarta, Indonesia, and provided by the Association of Asian Confederation of Credit Unions (ACCU), an associate member of World Council.

This year, 2020, only started four months ago, but the disruption in our economy has been very severe due to the COVID-19 outbreak.

To flatten the curve, the Government of Indonesia has issued a temporary measure, namely social distancing or physical distancing policies, which encourage people to limit their outdoor activities and avoid face-to-face contact with other people. However, those policies have arguably caused sluggish economic activity, both on the supply and demand sides.

Credit Union Sauan Sibarrung, as a cooperative that provides financial services, has also suffered significantly due to the implementation of social distancing or physical distancing policies. The implementation of the aforementioned policies has seriously affected service dynamics, especially for those who still rely on offline services. How can credit unions deal with this situation?

Digitization might become an alternative solution to help members who have difficulty paying their loans due to the current economic problems. The momentum spurred by the COVID-19 pandemic should become a turning point for credit union management to focus on accelerating online services to its members. Plenty of credit unions in Indonesia have been contemplating the digitization of products and services, but not many have opted to put it into practice.

Digitization is often considered painful and costly for credit unions. There are various arguments in favor of and against, thus the decision making process seems slow, hesitant and timid. This is clearly a great challenge for credit unions.

CU Sauan Sibarrung, nevertheless, boldly decided to digitize its products and services two years ago. The determination of CU Sauan Sibarrung has become an inspiration, especially at a tough time like this, as the COVID-19 pandemic continues to hit our markets, disrupt trade lines and wreak destruction. Since 2018, CU Sauan Sibarrung has diligently pursued digital services through the implementation of the Escete app. Through this app, members can make transactions easily and safely without having to come to a credit union branch office.

Features that can be accessed through the Escete app include:

  • Real-time balance checks for savings and loans.
  • online transfers to fellow credit union members.
  • online bill pay.
  • online purchases.
  • online loan applications.

Credit union members can easily register and active their Escete app online.

Earlier this year, CU Sauan Sibarrung also launced the first "branch car" in Toraja, which aims to serve members who don't live near an existing branch location. The car is equipped with a cash deposit and withdrawal machine, making it easier for members to do cash deposits and withdrawals for their savings accounts. Furthermore, members can also pay their electricity bills, pre-paid PLN and top up vouchers with the help of the car staff.

In the near future, CU Sauan Sibarrung will also roll out cash withdrawal services through bank ATMs using corporate debit cards. Additionally, it is also developing cash deposit and withdrawal services through retail stores for members. The objective of developing these services is to ensure credit union members can still make financial transactions with ease, security and affordability amid the COVID-19 outbreak.

Although there will be challenges, especially in persuading members in rural areas to switch from a manual to online system, CU Sauan Sibarrung continues to educate members so they can experience the benefit of online services, which are more efficient and easier to use.

It is time for credit unions to play an active role in implementing technology-based services like this. They can be the answer for credit union service demands from members, not only at a time like this, but for the sake of the sustainability of the credit union movement in the future.

It is time for credit unions to see the need for digitization as an important, urgent and affordable thing to do. No need to wait any longer and no need to hesitate. It is time to digitize credit unions!