Helping Businesses and Members with Financial Recovery and Resilience: A Q&A with WOCCU TIFI and Sicredi2020-10-05
Susy Cheston, Chief of Party for WOCCU’s Technology and Innovation for Financial Inclusion (TIFI) Project, recently sat down for a question and answer session with Liege Siqueira, Marketing Analyst for Sicredi Campos Gerais PR/SP in Brazil, ahead of their participation as panelists for the NCBA CLUSA 2020 Cooperative IMPACT Conference’s October 8 session on “Business and Member Financial Recovery and Resilience.”
Cheston and Siqueira will join other practitioners, cooperatives and experts in the field for that session to examine the financial and business challenges ahead and discuss strategies necessary for cooperatives to have a successful recovery from the COVID-19 pandemic. The panel will both discuss how best to adapt existing strategies, and to employ new and innovative business practices that will be required in the new business environment. There also will be discussion of how cooperatives can be included in government-sponsored stimulus and recovery plans in the U.S. and abroad.
Susy Cheston/WOCCU TIFI: What is the worst shock/disruption you have witnessed in your career before COVID-19? Did cooperatives fold, survive or thrive? What made the difference between those that folded and those that thrived?
Liege Siqueira/Sicredi Campos Gerais PR/SP: If we look back to our credit union history, we can say that our credit union has thrived. In 2006, we had a governance crisis. At the time, we can say that the board wasn’t working for the successes of the credit union and their members. So, after an intervention, a new board was established, and the directors searched for a partnership with the agro-industrial cooperatives that we have here in our region. This partnership, that we call inter-cooperation, was good for both sides. We needed their members, as well as them, to invest their money in our credit union, and they needed us to finance the agricultural inputs of their members that—during this period—were only able to be financed by a state bank. Before the partnership, our credit union was one of the ten smallest credit unions in the Sicredi System, with only R $54 million in total assets—that’s about US $10.8 million dollars in total assets—and we became one of the ten biggest credit unions, with R $3 billion (US $600 million) in total assets. With this experience, we can say that the governance made the difference for our credit union to thrive.
Cheston: What three steps can financial cooperatives take today to be sure they weather the crisis?
Siqueira: I guess we can say that the relationship with our members, something that we care about so much here in our credit union, made a huge difference in this period of crisis. We were able to call our members that were in need and suggest installments that the members could afford. We also joined all the government advocacy channels (government relief measures, government lines) where our members had the opportunity to use lines of credit with better rates and grace periods.
Our credit union didn’t stop serving our members. All the other financial institutions were closed, so we started to support our members by scheduling appointments. This way, we didn’t cause an agglomeration of members in our service points (branches) and, of course, we met them with all precautions—keeping social distance, wearing face masks and using hand sanitizer. To support our members, we started to divide our branch team in two, alternating each team every 15 days, with one team working from home and the other at the branch. If one team had to stay in quarantine, the other team could work at the branches, so our members weren’t affected. Luckily, we didn’t have any lockdown in our region.
Cheston: Is there any advice about financial resilience in a crisis that you think we would find surprising?
Siqueira: I think that when we talk about financial resilience in a crisis, we must maintain calm, be forbearing and try to reinvent. We must think in the long term and also have in mind that the crisis, at some point, will pass, and that our credit union stuck with our members during this difficult moment. We were able to guide some members to take advantage of the opportunities the crisis brought. For example, we provided financial support for some restaurants to start delivering food since they couldn’t open their restaurants to the public.
Cheston: What can we learn from our current experience to adapt and strengthen our operations for the next crisis?
Siqueira: (The) first thing that our executive board did was to communicate with our branch managers. They are the ones that are closer to our members. So, once a week, the executive board held a meeting to talk with the managers, giving them direction on what they needed to do to maintain our credit union and help our members. The communication and the direction were very important and made the difference because we were able to align strategies, and everybody knew what they needed to do.
Cheston: In general, are you seeing lower liquidity or excess liquidity?
Siqueira: In the beginning of the crisis, we realized that our liquidity could get lower and we were also thinking of our members’ needs after the crisis—where they probably will need resources to recover their businesses. We instructed our team to seek out investments. This way our credit union didn’t experience lower liquidity.
And also, in our region we have a lot of agrobusiness, and this segment wasn’t so affected by the COVID-19 pandemic.
Cheston: Are you aware of examples of financial cooperatives that have increased digital financial services quickly? If so, how did they manage that? What has the impact been?
Siqueira: Sicredi already had a mobile (app) and internet banking, and they are pretty good actually, but most of our members like to go to our branches. But with the pandemic, they were instructed to stay at home. So, we used social media to tell everyone they could use the internet to do their financial transactions, and it worked. We gave more time for them to make their financial transactions using the internet.
We also started using WhatsApp Enterprise. So, if a member needs assistance they can talk straight to their account manager or to our artificial intelligence service that can give them information and carry out transactions. If the member needs any assistance from their manager and can’t or doesn’t want to go to the branch, the member can use WhatsApp, which is popular here in Brazil.
When we realized that people were taking advantage of the COVID-19 pandemic to scam, we used social media to advise our members what was happening by telling them what we didn’t do, like asking for the password, for example.
Cheston: How can cooperatives support their members’ financial resilience?
Siqueira: To help our members to sell or offer their service, Sicredi developed an app that is a marketplace only for members. This way, only members can offer their products or services, and buy. The idea was to promote business between members.
Sicredi also made sure members benefited from government programs when the government spread liquidity for the market, provided temporary tax exemptions, and also provided some credit lines with better rates and guarantees from the government funds.
We have one member who works organizing events, and with the COVID-19 pandemic he was without income, so our credit union extended his loans with lower rates and a good grace period. By doing that, we are helping our member to keep his company during the pandemic without getting deeper into debt and the credit union has good chance to be re-paid when the pandemic is over.
Cheston: Was Sicredi able to support the broader community?
In Sicredi Campos Gerais we have a social fund where 2% of our income goes to this fund that is available to the community to develop health, education, culture and social inclusion through projects that are approved by our board. This year, 15 projects were approved to treat, prevent and help the consequences of COVID-19 pandemic. We donate protective equipment (face masks, hand sanitizer) and food for institutions that are in need.
Sicredi also created a campaign to help the local economy. In this campaign we used social media to encourage people to buy local. We created a website with business tips, like how to use social media to sell or offer your product, how to innovate with digital payments, and we also provide e-books with business tips they can download for free in the campaign website.
Cheston: What is your one “Tweet” that you want to leave with the group?
Siqueira: I would say fast and assertive communication, internal and with the members, because this made the difference in our credit union.
You can attend the NCBA CLUSA 2020 Cooperative IMPACT Conference’s October 8 session on Business and Member Financial Recovery and Resilience—and the rest of the IMPACT Conference’s International Track—for free by registering at https://ncbaclusa.coop/2020-cooperative-impact-conference-sessions-international.
The Technology and Innovation for Financial Inclusion is a project under USAID’s Cooperative Development Program.