Challenges

Commercial banks traditionally rarely serve the unbanked, low-income earners and micro-entrepreneurs. As a result, financial cooperatives, like GIG CFI, focus on serving the vulnerable and unbanked communities.
GIG CFI aims to create self-help financial mechanisms. With limited access to credit to create income/employment, GIG CFI exists to localise capital formation with subsequent credit extension to members.
The underbanked often lack the kind of financial literacy they need to make well-informed money-related decisions. Yet, the higher the financial literacy of the members, the lower the credit risk for the financial institution.
Cooperatives are well placed to develop the financial skills of a broader set of community members, such as teachers, micro and small business owners, and other community members in smaller towns and villages.
Facilitated by GIG Institute, the cooperative offers a free online financial literacy training program. The goal is to help members get rid of unproductive debt and learn to create multiple income streams. As a practical application of what is taught, members of the GIG Institute are encouraged to join the CFI. Additionally, existing members who complete certain financial literacy courses can also attain higher loans.

Primary target

Which group does your product/service primarily target?

Description of Innovation

GIG Trust migrated its operations to cloud in 2013 and became one of the earliest cloud adopters in the region. The CFI selected Mambu's composable banking platform because it offers flexibility and is easily configurable. Over the years, it has rolled out the following products:
- Interest-free loans with share-based savings as collateral,
- P2P loans structured with one or multiple P2P investments.
By building on Mambu’s cloud banking platform, GIG Trust can easily modify existing products and add new ones quickly to cater to the needs of their CFI members. The accessibility of the cloud also played a key role in the selection process. The mobile penetration rate in South Africa is high, and members of the cooperative are able to use Mambu with a GPRS cell phone signal even in very remote areas.
In South Africa, COVID-19 had a considerable impact on mobile banking, as it became existential during and post the pandemic. According to McKinsey, since the start of the global health crisis, nearly half of South Africans said they have increased online and mobile interactions with their banks. Interest-free loans with share-based savings as collateral, P2P loans structured with one or multiple P2P investments, free online financial literacy training program.

Results

Banking the underbanked
GIG CFI serves the vulnerable and unbanked communities, creeating self-help financial mechanisms. With limited access to credit to create income, GIG CFI localises capital formation with subsequent credit extension to members.

Behavioural banking
The underbanked often lack the kind of financial literacy they need to make well-informed money-related decisions. GIG offers a free online financial literacy training program, helping members get rid of unproductive debt and learn to create multiple income streams.

Fostering savings culture
GIG CFI enables the accumulation of savings by offering conventional savings options - notice savings accounts, fixed deposits. GIG's loan products often require internal savings as collateral, creating an incentive for members to develop a savings culture.

Resolving debt problems
In SA, banks often offer personal loans with interest rates upto 28 percent, and some as high as 60 per cent. GIG was able to cut back on interest revenue, providing members with interest-free loans to settle debts.

Becoming more energy resilient
Cloud enables GIG to roll out a digital banking structure and take all of its operations online. Staff can work from home, a number of members have used GIG CFI’s loans to install solar panels to ensure greater energy self-sufficiency.