Faced with competition from micro-finance institutions and fintechs, credit unions in Asia have decided to take a step further in digital payments.
The Asian Confederation of Credit Unions (ACCU) has recently launched a common banking and payments platform for its members in the Philippines.
The platform, called APP, was presented to delegates at the World Credit Union Conference in Belfast. It provides services such as account top-up, cash withdrawal, conditional cash transfer, bill payments and peer-to-peer payments, including international remittances.
The technology for APP comprises Temenos’s MicroBanking system and Software Group’s UnderTree suite, running on the Microsoft Azure cloud. APP is currently piloted by two Philippines-based ACCU member organisations, National Confederation of Cooperatives (NATCCO) and Philippine Federation of Credit Cooperatives (PFCCO).
ACCU represents 39 million individual members from 36,000 credit unions across Asia. These range from advanced credit unions such as those in Korea to others which are just starting up. The common challenge for all of them is responding to competition from fintechs, which are often innovative and creative. An analysis by ACCU concluded that there was an opportunity for credit unions to work together.
Elenita San Roque, chief executive of ACCU, explained how the strategy came about. “There are 47 million internet users in the Philippines, most with two mobile phones. But a lot of companies in the Philippines provide digital access to credit unions,” she said. The platform is aimed at enabling members to see credit unions as their prime financial institutions and ensure sustainability through new services.
“Credit union networks are stronger when we co-operate, they can own their own destiny if only they co-operate.”
The infrastructure for the project is provided by Microsoft through cloud technology. The company is currently investing $50bn in cloud computing infrastructure. Microsoft complies with the information technology, security techniques and code of practice for protection of personally identifiable information in public clouds.
Murray Gardiner from Temenos added: “These internet based companies change consumers’ perception of what products need to look like. People expect services to be available through the internet.” He explained that credit unions lacked the infrastructure and ability to make large investments or manage large systems individually and could achieve scale in payment business only by working together.
“Know that micro-finance organisations are targeting your members, know that mobile operators are offering services to members and all revenues are lost from the credit union system,” he told delegates.
Asked whether cloud computing was secure, he said: “It’s as secure as it can be. A lot more secure than running your data on a local server. Any device connected to the internet is exposed, but this is used by some of the largest companies in the world”.