Can Traditional Savings Group Still Work In Today’s Economy?

[Opiate32]

As well all know that before digital banking came into existence, people found ways to save up money together. Members of the group contributed regularly and each person take turns receiving the gathered money. What makes it more interesting is that it does more than just encourage saving, it gives someone access to a larger sum of money without taking a loan provided that they can keep up with their contributions.

I believe today technology can make these arrangement easier to manage and track but though it cannot eliminate the risks involved. Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

[Jubilee58]

As well all know that before digital banking came into existence, people found ways to save up money together. Members of the group contributed regularly and each person take turns receiving the gathered money. What makes it more interesting is that it does more than just encourage saving, it gives someone access to a larger sum of money without taking a loan provided that they can keep up with their contributions.

I believe today technology can make these arrangement easier to manage and track but though it cannot eliminate the risks involved. Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

I think this method of savings is still working today, and is mostly happening among traders. It is actually a good system because traders uses it to boost their personal business since they may not have the access to take loan from the bank. However this system requires people who are trustworthy to be able to sustain sustain such contribution for very long term. Today, the existence of bank is actually making such contributions safer because individuals no longer hold such contributions in their hands instead they put the money in the bank with two or more signatories to the account to avoid an individual gaining access to that account.

Today, their is even more advancement on how traders or business people gain access to loan without going to the bank, sometimes individuals can come together and esterblish a cooperative where they contribute money periodically, and you get access to loan from these cooperatives with very minimal interest rate that is even lower than bank rate, you collect this loan as a member to run your personal business, and repay gradually without any pressure on you.

[stadus]

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

You have mentioned the risks and with those risks I don't find it attractive, what's the reason for saving as a group, so someone could borrow from the pooled funds? This is also popular in our country, members contribute, at the end of the month there's a raffle and someone gets the total amount and then they start saving again. The problem is if someone fails to contribute the amount is no longer complete, leaving those whose turn comes later getting less than what they are supposed to receive. This does not look like the best way to save money, better put it in a bank, and if you want to borrow, borrow from a financial institution.

[Grease5000]

Digital tools might go a long way like improving transparency and it also help to remove the pressure in person controlling the whole operation, because with mobile app members can who have contributed his or her money and who is yet to contribute his share.

Though digital tools help to improve transparency and reduce all physical activity involves. It does not totally eliminate the risk involve, because a member may fail to contribute his own quarter after receiving money from other people and may even disappear and  stop using the platform totally.  But on a second thought I think there could be a remedy or ways to limit or manage this risk by integrating  a banking system into the platform, which align with banking  orders or laws that automatically withdraw money directly from users bank account when they fail to pay up  their own quarter after receiving money from others.

[Livingleged]

~snip
This is not to replace these traditional but to improve how they work.

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

Building a digital platform for such contributions isn’t a difficult thing to do actually, the only concern and challenge will be the readiness and the sincerity of the contributors. This only way this can work without fear of someone collecting contribution from other people and not run away is if there would be a collateral payment  or asset that is equivalent to the expected money to be contributed in a round in case someone tried to default payment then it will be used to cover for that person. Which will most likely discourage people with that kind of mindset.

I saw some user suggesting enforcing banking system into the platform. It could have worked too but I think it’s not easy to do that if you’re not an institutional sectors, and also automatic deduction might be against banking rule.

[Filicius]

I believe today technology can make these arrangement easier to manage and track but though it cannot eliminate the risks involved. Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

It is something that has been in demand for a long time, and at some point it will probably see the light of day, although there are still some complications for it to fit in with the regulatory framework of data protection.

I am talking about a public reputation system, which not only large companies such as banks and insurance companies can access (such as the credit score) but, if someone fails in their promise to return the money, they will be publicly marked as unreliable. A little bit like the trust system that we use around here.

[Ryu_Ar1]

As well all know that before digital banking came into existence, people found ways to save up money together. Members of the group contributed regularly and each person take turns receiving the gathered money. What makes it more interesting is that it does more than just encourage saving, it gives someone access to a larger sum of money without taking a loan provided that they can keep up with their contributions.

I believe today technology can make these arrangement easier to manage and track but though it cannot eliminate the risks involved. Someone might stop contributing after receiving their share and leaving the remaining members to deal with the shortfall. This is not to replace these traditional but to improve how they work.

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

It can be done and indeed with the development of technology and digitalization of the economy it will be easier, including for financial groups like this where they can make transparency their advantage.
As for cheating after winning as you alluded to, things like this should be minimized from the beginning because for this cheating technique there is or not digitization can still be done but minimizing this by finding members who really have a good reputation and are ready with legal consequences when caught cheating, this should still be controlled.

But indeed this is an option and in fact I have long abandoned traditional savings groups like this because the play will always be the same where cheating (most commonly leaving after winning) can always happen regardless of the presence or absence of financial digitization.

[Coyster]

This is a cultural thing and it isn't popular in certain regions, so some users may not understand what you are talking about. What you've explained is popular in my country, mostly amongst people who own their own small businesses and earn small money every day. You'd hardly find people who earn a salary (at the end of the month) involved in this.

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

What digital tools are you talking about? I do not like this method of funding, it is not reliable and the agreement is non-binding. Members can default with no legal consequence. Now that's not such a smart way to pool funds together, as the risks outweigh whatever benefit you think there is.

[crwth]

Isn't there already some kind of digitization in the current savings group?

From what I have found, there are things called

• M-Changa (Kenya)
• eSusu (Nigeria)

Like, has it really been effective in this economy? I hope it does. Or maybe some kind of blockchain-based savings group app with smart contracts, etc.

[Bitcoin.com97]

Is still in existence, but commonly among business men and women, they contribute weekly, them one person take it to boost his or her business,then the next week they contribute for another person , and it's really helpful because taking loan from bank and other source now is very hard ,but with such method it makes things very easy for business men and women, but I'm always scared of people who doesn't have work but still go into it , reason been that they want to save up money to get something,and sometime they may not be able to meet up to contribute for the next person, so I will prefer the traders own , because they already have an existing business and can generate daily income , so the traditional saving group still exist but in a more modernized way .

[Findingnemo]

Maybe it was possible in the 20th century but now I won't trust anyone else, I only prefer the regulated model if we have to go with the trust because we can't just trust someone even if they are familiar to us. Maybe it worked in the past because they don't have a choice however now the loans are easier than ever if they can simply provide a bank statement they can get a loan but with higher interest rates.

[Frankolala]

Before you start saving with a particular group who has the same vision, you should make sure that those involved in the contribution should be trusted and have a means of income which they can use part of it for his weekly/monthly contributions. In fact, the digital tools has made it easy because I belong to an AKAWO group in my LB and it has been going smoothly, with no one doing the opposite.

There's a deadline for when payment will be made by all individuals in the group and if you fail to meet up with the deadline, you will add 1% of the amount being contributed and no one is complaining.

[Promocodeudo]

Before you start saving with a particular group who has the same vision, you should make sure that those involved in the contribution should be trusted and have a means of income which they can use part of it for his weekly/monthly contributions. In fact, the digital tools has made it easy because I belong to an AKAWO group in my LB and it has been going smoothly, with no one doing the opposite.

Good advice and idea, although because of the experience I had, I have stopped involving myself in such things for now, that's why I said good advices, cause you'll see people that doesn't have any serious thing that fectch them money that'll want to be part of the contribution, at the end they'll be the ones to ruin everything, which is why if anyone wants to be involved in any of such, but all the contributing members means of contribution should be well know to avoid problems coming up later, of course people do this without issues but members must carefully be selected as you warned.

[Mayor of ogba]

Yes traditional savings is still working in today's economy, but just as you have highlighted the risk involved that's just what is discouraging more people to adopt traditional savings. Anything that involves money isn't what you can deal with any person you don't know his or her behaviour, because there are people who would receive their contribution first they will run away without contributing for others. You must know the people you want to get involve with traditional savings down to their home so that if anyone run away after receiving his or her contribution, you can easily go to the person house for his family members to reach out to him or her and tell him or her to return your money.

[Gozie51]

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

Yes periodic contributions still help individuals of same group and very much in fact. Most families build homes, sustain their business with it. It serves as one of the best ways to savings. If you are someone who doesn't know how to save independently, thrift is the solution because you must be compelled to make your own contribution on the said time. This kind of platform started within neighborhood people who move around to collect agreed money but lately with digital system, it metamorphosed into something bigger. With digital system, people whose proximity is not close, they organize themselves and form this thrift group. It is even more pronounced with people who are in the same kind of jobs and that is very secured.

So many government workers now involve in this whether in the same location, branch, state or not. This is possible because of digital tools like internet connection through WhatsApp, Facebook etc, they organize themselves to support and help one another to achieve their purpose that they wouldn't ordinarily achieve within a short time. So digital tools have further increased the awareness of thrift for those who are not able to save by themselves. It very much helpful and it encourages people to develop the culture of savings.

That of workers through digital system is still secured because everyone knows when they receive salary. Those who do it in the neighborhood also have personal data and contacts of those involved in it.

[GiftedMAN]

Digital banking has helped to modernize a lot of things but it did not change some certain things totally because people were already used to their local way of doing things and it had been helping them to gather money to execute their plans. Up till date the most of the market women are still involved in their daily savings because helps them to gather enough money to stock up their shops and increase their businesses, they know each other and the capacity of the people that are involved in the business and sinceost of them are involved in daily profit given business they do not find it hard to raise money to pay up because they know that failure to pay after the person had received his own moeny will attract some penalties.

I have participated in such group where we raised money monthly then slots are given to memebers to indicate when they will be given tnri own moeny, all the people who took part in the contributions cooperated because it was helpful to all of us.

[Mrbluntzy]

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

Everything has its associated risk, so even with the risk that is associated with this kind of traditional savings method, there are people who are consistently doing the peer to peer savings not because they can not access bank credit but because they want something that they feel it's much comfortable to them. In the locality I come from, it's usually the local businesses owners that does this kind of savings and back then, they were using paper cards to note down the details of each participant, although they are still using paper cards but the way some persons do it now is that they create a WhatsApp group, add all the participants and then create a list with date of how the savings will keep rotating from one person to another until everyone have benefited, then they will start again or end it.

[MArsland]

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

I personally still follow this program with a duration of 1 year and the number of members is about 20 people. I am in the 16th draw so I have the obligation to continue fulfilling the installments until the remaining 4 people get a share.
Regarding methods and tools, of course, digital implementation is very effective because everyone can monitor finances transparently. But some groups are still very lay and still rely on trust. Therefore, the criteria for the holder of money must have a reputation, it's just to minimize it we use the closest group of people so that if the holder of the money takes the funds, his family members will automatically bear the debt.

[tabas]

Now my question is could digital tools make group savings a reliable source of financial support for people who struggle to access bank credit or would the risks still overweight the benefits?

If there are digital tools or digital banks that allow people to save on their own and gives some benefits of giving credit or loan to its users, then there's no need for that individual to join those group savings. My though on this is that, it's great for those who think they'll never have access to banking services but there's a big chance that whoever holds the funds of the group might runaway and will be tempted to get it. That's the risk there, so even if you're a minimum wage earner, try to build your credit ratings even for small amounts just save and I think the time will come that the bank will approach you for being consistent and will offer you some credits/loans.

[Creeper0]

I still see this method in business associations. Members save regularly and if someone needs money, they can borrow from there at a very low interest rate. The question may arise here, why would interest be required to borrow from their own money? The answer is to meet the management costs.

I do not know how much this method affects the economy of the country. But it has a huge impact on the businessmen. These associations play an important role in standing by each other in times of trouble and creating business unity.

But, I am not familiar with the strategy as you mentioned. The real purpose of receiving money by lottery or by queuing and returning it after a certain time is still not clear to me. Suppose I need money today, what will I do with it if my name comes in the lottery after the need is met? The strategy I mentioned seems understandable to me.