Empowering Cooperatives through Information & Communication Technology: Connectivity & Accessibility

Cresente C. Paez

President & CEO

National Confederation of Cooperatives (NATCCO) - Philippines

About NATCCO…

The biggest and strongest national federation of cooperatives in the country in terms of geographical reach, membership, financial capacity and array of services.

Core financial functions focused on treasury, deposit-taking, credit-granting, money transfer and cash management services

Non-financial services include accounting software, website development, training & consulting on microfinance, ICT specialization (it@coops), and professionalization of cooperatives.

About NATCCO…

We are a national financial solutions cooperative, servicing the needs of 1.2 million individuals through our local cooperatives.

Our solutions conform international financial intermediation standards; and the highest degree in responding to the needs of the communities we serve.

….NATCCO throughout the country has embraced this financial solution for: Liquidity pool management

Wholesale lending Cash management services

Investment in hi-impact, high growth enterprises Development of information technology (IT)

Microfinance Innovations Capability building through training & consulting

The NATCCO NETWORK 1.2 million members 589 co-ops with 354 branches Php60 billion (US$1.5 billion) 6,000 Employees

The NATCCO Central (As of Dec. 31, 2007) US$17 million (P683 million) assets US$1 million (P40.4 million) – shares of co-ops US$9.2 million (P369 million) – deposits US$5.3 million (P212 million) – borrowings US$7.9 million (P317 million) – loans disbursed PAR – 0.6% US$0.17 million (P7 million) - Net Surplus 87 employees

1 Kalinga2 Abra

13 Ilocos Sur1 La Union

4 Benguet4 Pangasinan

2 Zambales2 Pampanga

2 Bataan

37 NCR

7 Cavite

4 Batangas

2 Mindoro4 Antique

1 Iloilo4 Negros Occidental

4 Negros Oriental

1 Palawan1 Guimaras

1 Misamis Occidental

2 Zamboanga del Norte

6 Zamboanga del Sur

2 Sulu

4 Cagayan3 Isabela7 Ifugao2 Nueva Viscaya1 Quirino3 Aurora8 Bulacan5 Rizal1 Laguna14 Camarines Norte8 Quezon11 Camarines Sur2 Sorsogon

1 Eastern Samar13 Leyte21 Cebu

6 Bohol

1 Camiguin6 Misamis Oriental

1 Surigao del Sur1 Agusan del Sur2 Bukidnon

4 North Cotabato11 Davao

1 South Cotabato

1 USA

4 Lanao del Norte

1 Marinduque

NATCCO MEMBERS BY LOCATIONAs of January 31, 2008

ICT-Driven Co-ops•Accounting software (100)•Internet Connections•ATMs (6)

Why Information & Communication Technology?

Competitiveness is the key that drove NATCCO to go into ICT

ICT as a tool to deliver more competitive products and services to cooperatives and its members

2003, initially implemented ICT within the organization, giving birth to: Local Area Network Internet & Email NATCCO Website ICT Trainings

Specific Developmental Problems that ICT should Address in the Cooperatives… Automated financial transactions &

accounting Volume of transactions: shift from manualization

to automation The issue of accuracy, efficiency, speed, analysis,

and MIS (generation of reports) Data generation (network wide) The issue of different system providers (i.e.

outsourced, in-house) and their continuity. Expensive to develop and maintain by one local

co-op

Specific problems…

The inconvenience of transactions “over the counter” Crowding of customers during peak hours. Offices are closed before 8:00 a.m. and after 5:00

p.m. and during Saturdays & Sundays Proximity: Long distances to travel

Specific problems…

Money Transfer No access to payout centers in rural areas

(money sent from other places) Bank-to-bank transfer: requirement to open a

bank account and pay expensive remittance fee

eKoopBanker - Coop Banking System

System’s FrameworkData Input

LOANData

InputSavings

Data

InputAccounting

Data

POLICIES & PROCEDURE

S

CHART OF ACCOUNT

S

LOAN PORTFOLIO MGT. SYSTEM

SAVINGS DEPOSIT/

WITHDRAWAL

TRACKING SYSTEM

GENERAL ACCOUNTING

SYSTEM

Financial Statements

Management Reports

Information

Generally Accepted Accounting Principles

Technical Features

Window-Based

Available on both stand-alone & network versions

Developed using Visual Basic 6.0

With Microsoft Database Engine (MSDE) or Microsoft SQL Server as its Back-end Database Manager

Crystal Report enables migration to MS Word, Excel & other file formats

eKoopBanker - Coop Banking System Automating the operations of the cooperative

Loan portfolio management Savings tracking General accounting

Standardization Streamline the operations Member Satisfaction

Hindrances

Acceptance End-User Resistance to change Fear of layoffs due to computerization Investment Cost False expectations on automation Lack of knowledge in the complexity and impact of

automation Low staff competency Inability to meet automation requirements (time,

human & resources)

Strategies used and Significant Accomplishments… Strategies Used

One standard accounting software for the network To own vs. to outsource: Buy an existing software

and enhance Accomplishments:

Currently installed in 96 cooperatives with 118 branches

On-going migration of the system to open-source and web-based application

Growth for the eKoopBanker Migration to open-source system Web-base application Inter-branch capabilities Data warehousing Online member transaction SMS transactions ATM Integration

ATM & Cash Cards

Strategies Used ATM & Cash Cards – to outsource the system For the ATM – to join the ATM network as a non-

bank For the Cash Card – co-branding with a bank

Accomplishments Installed and functional ATMs (Quezon City,

Dumaguete, Tacloban & Iligan) For the Cash Card - NATCCO entered into

partnership with Chinatrust Bank.

ATM

NATCCO as the Settlement Bank for cooperatives thru Central Fund

Cardholders can transact to any ATM network nationwide Availability of cash anytime, anywhere

Loan disbursement Attract membership Security

ATM

ATM Withdrawal

Cooperative Cooperative

Cash Card

Re-loadable money card Withdraw Cash – All ATM Networks VISA Debit Card – Visa Accepted Worldwide Bills Payment

NATCCO is the card issuer Cooperatives – distributors

of the cards Members – users of the

product

Cash Card

Easy cash-management No initial deposit No minimum maintaining

balance Easy to roll-out Convenience with PIN

Mailer Minimize Risk – cash-less

transaction Hassle free Highly secured

Member’s name (1st line)Coop name (2nd line)

ATM Withdrawal

POS

Cooperative

Approval

Card Loading

Cash Card

ATM & Cash Card - Bills Payment

Credit Card Companies BancNet ATM

BancNet Online

AIG VISA/Master Card Allied Bank VISA Banco Filipino VISA     Bankard/RCBC/MC/VISA/JCB BDO Credit Card Citibank VISA/Mastercard East West Card HSBC Cards Metrobank Card MMO Card     One Card Security Bank Cards Diners/Mastercard Standard Chartered VISA/Mastercard Union Bank VISA

Telecommunication Companies BancNet ATM

BancNet Online

Bayantel/ICC Digitel/SUN Cellular Eastern Telecoms Globe Telecoms Innove PLDT     PT&T     Smart Communications

Cable TV Companies BancNet ATM

BancNet Online

Destiny Cable Home Cable     Sky Cable/ZPDEE

Utility Companies BancNet ATM

BancNet Online

Meralco Maynilad Manila Water Co., Inc. Visayan Electric Co., Inc.

Internet Companies BancNet ATM

BancNet Online

Edsa Mail     ZPDee Infocom -ISP    

Gov't and Owned Controlled Corp. BancNet ATM

BancNet Online

NSO Helpline Plus PSC-Epass

Media/Publishing BancNet ATM

BancNet Online

Directory Phils. Corp. Far East Broadcasting    

Loans/Financing Companies BancNet ATM

BancNet Online

FG Financial Co., Inc     Chinatrust Salary Stretch Citi Financial Corp. Citystate Savings Loans Nation Link Pay Standard Chartered EZ Loan PSBank    

Insurance/Pre-Need Companies BancNet ATM

BancNet Online

New York Life Insurance     Paramount Life Prudential Plans, Inc.     Manila Bankers     PLPI     Fortune Life     Fortune Care Provident Plans    

Charitable Institutions BancNet ATM

BancNet Online

Bantay Bata Church of Jesus Christ of Latter Day Saints Knowledge Channel Piso sa Pasig

Others BancNet ATM

BancNet Online

FEBC Phils     Green Dot     Manila Memorial    

ICT Solutions

Beneficiaries Cooperatives & their members

Technology Accounting software – owned ATM, Cash Cards, Credit Cards, Money Transfer - outsourced

Capacity building Training provided

Project Partners Rabobank Foundation, Chinatrust, Infoserve, Western Union (DA5

Company) and Bankard Is it a pilot project?

Open source & web-based accounting software, MasterCard & Cash Card with VISA

Was it scaled up? Ekoopbanker, COOPinoy ATM, WU Money Transfer

Website Development

Connecting co-ops through virtual networking:

LINKING WEBSITES

NATCCO Website

Recent Site Created by NATCCO

Recent Site Created by NATCCO

Site Created by it@coops Specialist trained my Inwent, AWCF and NATCCO

Site Created by it@coops Specialist trained by NATCCO in partnership with AWCF &INWent-Germany.

Major Challenges

Accounting Software (ekoopbanker) To be fully developed as OPEN SOURCE and

WEB-BASED system Inter-branch and inter-coop transactions as one

NATCCO network One system, One Standard, One software

COOPinoy ATM Co-op as non-bank is mainstreamed in the

banking system NATCCO to own a co-op ATM network

Major Challenges…

Integration of internet and mobile phone banking to our accounting software

Cash Cards & Credit Cards Targeting 100,000 cardholders

Money Transfer Increase from 300 to 1,000 locations in the next 3

years Card-Based Technology Development: Card-to-

card money transfer with bills payment functions

Key Learnings

Owning or developing a technology versus outsourcing is a “business decision” with reference to investment requirement, in-house capability, economy of scale, potential market impact and competition.

Financial services delivered through ICT is a “value proposition” to win and keep your customers and members. Bottom line: Does ICT create superior value in local communities?

It is not only ICT but also “innovation-driven” ICT.

Key Learnings…

”ICT?”

“Do it Fast, Do it Right and Do it Cheap.”

Thank you very much!