Colombia's Credit Unions Adopt WOCCU Model to Expand Financial Inclusion
Colombian government awards three-year program to bring access to the underserved
November 09, 2011
MADISON, Wis. — Through its Banca de las Oportunidades program, the Colombian government has invited World Council of Credit Unions (WOCCU) to replicate its Semilla Cooperativa [cooperative seed] rural outreach model to expand financial inclusion in some of Colombia's most marginalized areas. WOCCU's three-year, US$2.5 million program will employ mobile technology to bring financial services to 100,000 previously unbanked people in rural and low-income communities throughout the country.
WOCCU is working with 12 well-established credit unions and their 182 points of service to implement Semilla Cooperativa, a savings-based approach in which credit union field officers travel into nearby communities to bring financial services directly to members in a group setting. In addition to increasing membership among rural and low-income communities, the WOCCU program aims to expand the credit union network by at least 10% and develop new microcredit and microsavings products to meet new member needs.
"Colombia's credit unions grew out of a need for greater financial access in areas of the country that other financial institutions were not reaching," said Brian Branch, WOCCU president and CEO. "Over the years, we have worked with the credit unions to strengthen operations, develop new products and expand outreach. Now we are ready to see how much farther they can reach using mobile technology and a model that has successfully brought access to thousands of Mexico's poorest families."
The Semilla Cooperativa model evolved from a recent three-year WOCCU program in Mexico, where 250,000 people living in marginalized rural communities became credit union members, far surpassing the program's targeted 15% market penetration. The credit unions improved efficiency and financial inclusion with new technologies, including personal digital assistants (PDAs), point-of-sale (POS) devices, handheld printers and automated teller machines (ATMs).
Credit union field officers trained in the Semilla Cooperativa model use PDAs and handheld printers to enroll new members, record savings and loan payments and process small loan applications in the communities they visit. Their monthly visits save members time and money by not having to travel to the credit union, and the technology provides a secure and efficient way to process transactions.
In Colombia, WOCCU will use a similar approach to reach markets that are either geographically isolated or have not joined the formal financial system due to a lack of tailored products and the transaction costs related to reaching the nearest credit union branches. The program builds on the achievements of WOCCU's 2008–10 program in the country, also funded by Banca de las Oportunidades, in which nine credit unions with 48 points of services streamlined operations to better serve their members and build a foundation to expand to outlying communities. By the end of the program, credit union membership had increased by 28% (49% of which were women); institutional capital grew by 52%; and the number of savings accounts increased by 43%. Four of the program credit unions are now among the 12 participating in the current program.
WOCCU helped Colombia establish its first credit unions 50 years ago. Today the sector has grown to 192 credit unions that serve more than 2.2 million people across the country.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 60,500 credit unions in 109 countries serve 223 million people. Learn more about World Council's impact around the world at www.woccu.org.