FICCO: How it started and where it wants to go
It was in 1954 that a group of seventeen faculty and non-teaching staff of the then Ateneo de Cagayan, now known as Xavier University, decided, through the inspiration and guidance of Fr. William Masterson, S.J., to form the Ateneo Credit Union (ACU). Before this decision, this group was bound by a scheme, known locally as “huluga” (or “paluwagan”). It was during one of their meetings that Fr. Masterson chanced upon them and suggested the formation of a credit union.
With an initial contribution of just P 27.30, ACU fulfilled the credit needs of its members. Limited in scope it hardly grew, such that by 1970 its resources amounted to only over P 184,000.00.
The year 1970 was a significant milestone in the life of ACCU (Ateneo Cooperative Credit Union, with cooperative added when it was formally registered in 1961) as this was the year that it decided to open itself to the Cagayan de Oro community. The next 10 years saw the visionary leaders of ACCU doing office-to-office, chapel-to-chapel, and barangay-to-barangay pre-membership seminars, while at the same time focusing on market vendors.
The effort paid off for at the end of that decade, FICCO membership increased from over a hundred in 1970 to 987 by the end of 1980. Resources also increased to P 2.8 million. But the seeds so planted started bearing fruits, with membership and resources hitting over 9,000 and P 49.2 million, respectively, by the end of 1990. FICCO spread its wings and took off in the 90’s, as the following graphs show:
A lot of cooperatives, even as far away as Central Luzon, visited FICCO in the last few years purportedly to know its secret. FICCO is quick to remove that air of mystery, easily sharing to them what is known as the FICCO “culture.” But before delving into this culture, let us first look at the growth strategies of FICCO.
FICCO believes that it has good “products” (38 types of loans, plus mutual aids) that can easily help the poor and the middle class and free them from the clutches of money lenders. So it identified those most dependent with these informal sources of credit, i.e., market vendors, micro entrepreneurs, farmers, fisher folks and even employees of private and government enterprises, and focused its energy and resources in convincing these particular market segments to join. Its visionary leaders at that time went barangay-to-barangay, chapel-to-chapel, office-to-office, and to one public market in Cagayan de Oro to sell FICCO.
As membership grew, the need to open more offices to bring its services closer to its resource-scarce member-owners became imperative. While its general assembly approved the opening of branches as early as 1986, the first branch was actually opened in 1992. The six-year gap came about because the champion of the branch-out idea took a rest as elected volunteer to pursue higher studies, followed by a stint with the Asian Confederation of Credit Union.
As more branches were opened, the more the membership of FICCO grew. And this is not because of a well-designed, well-funded advertisement or recruitment scheme. Rather, FICCO relied mainly on the word of mouth of its satisfied members. These people convinced relatives, friends, neighbors, co-workers, or fellow vendors, drivers, farmers, etc. to join FICCO.
The opening of branches was cautious at first that by the end of 2000 FICCO has only eight branches. Membership more than doubled, from 9,186 at the end of 1990, to 24,026 by the end of 2000. Having mastered the requirements for opening branches, the coop went full-blast in the years that followed, that by June 2015 FICCO has a total of 74 offices (67 in Mindanao, 6 in the Visayas and 1 in Makati). Membership has also grown to 225,000 as of end of June 2015.
FICCO did not just open branches willy-nilly. Certain scripts are followed: number of members in the area, total loans, capital and deposit of those members in the nearby FICCO offices, growth prospects, other opportunities, ideal location, and other considerations. Once the decision to open a branch is made, a trainor’s training for Education Committee volunteers is conducted. These volunteers are expected to spearhead the member recruitment effort of the branch. The members of the Credit Committee and the Audit and Inventory Committee are also trained to be able to provide management with the necessary support in terms of credit evaluation and internal control.
The biggest question is why people accepted FICCO? Some would phrase the question this way: What is the secret of success of FICCO? As mentioned earlier, FICCO is what it is today because of its “culture.” A dictionary defined culture as “a set of shared attitudes, values, goals and beliefs that characterized an institution.” FICCO classified its values, goals and beliefs as follows:
Total member care: quality service, transparency and accessibility of services, service with personal touch, and active participation of grateful members
Good governance: stewardship and ownership, transparency and democracy, accountability, common good, self-reliance, and recognition of rights and responsibilities
Defining values: sacrifice, discipline, volunteerism not opportunism, lean organization, control cost and expenses, high return to members, aggressive yet sure-footed.
Under total member care are the following values:
- Quality service takes the form of different types of services delivered efficiently at low cost such that members will feel that something is added to them in joining FICCO.
- Transparency and accessibility of services mean no hidden costs, fast turn-around time in service delivery, opening of branches to where the members are, and accessible office hours.
- Service with personal touch is an offshoot of the close ties between the staff and the members developed over the years of mutually productive relationship.
- Active participation of grateful members is a natural consequence of the closer ties and the mutually productive relationship.
Under good governance are following beliefs:
- Stewardship and ownership is recognizing that FICCO is owned by the members and that the officers and staff are expected to be trusted stewards of the resources entrusted to them by the former.
- Transparency and democracy mean that the leaders and management are expected to conduct the business of FICCO above board and that the members, as owners, have the right to question any act of the former with the former obligated to enlighten the later if need be.
- Accountability means everyone at FICCO is aware of his/her role and that a paper trail is available to establish responsibility.
- Common good recognizes the fact that FICCO has a multitude of stakeholders, especially the owners. Thus, its policies and products are designed with the best interest of the majority in mind.
- Self-reliance is the moving spirit of FICCO, not donations and grants. FICCO people have long concluded that dole-outs erode confidence and engender dependence.
- Recognition of rights and responsibilities by members, leaders and staff make it easier to govern FICCO. No special treatment, no vested interest.
Under defining values are the following attitudes:
- Sacrifice means FICCO constituents are willing to go the extra mile if doing so will redound to the good of the organization.
- Discipline is translated by following policies and procedures without exception. Meetings and assemblies start on time.
- Volunteerism not opportunism is probably what sets FICCO above the other coops. Officers are not there to make FICCO a milking cow.
- Lean organization means FICCO hires only when absolutely needed. No hiring of relatives within third degree by consanguinity or affinity.
- Control cost and expenses is one skill that FICCO is good at. Spartan or minimal are words that best describe FICCO operation. No frills, no junkets.
- High return to members despite the fact that its operation is retail. Among coops FICCO charges the lowest loan interest, thanks to volunteerism, lean organization and control of cost and expenses.
- Aggressive yet sure-footed describes FICCO’s moves to open branches, take-over coop banks and coop insurance.
The secret of FICCO’s success? FICCO never hesitates to adapt itself to the needs and challenges of the ever evolving socio-economic environment. But even as it tries its best to go with the times, it also never falters in upholding its culture.
FICCO’s rural presence facilitated the delivery of such services as savings generation (ordinary savings, time deposits, youth savers, installment savings and retirement savings) and capital build-up. These in turn made possible the delivery of loan services (38 types of loans), as well as mutual aid and risk protection (life, accident, hospitalization of members and their families, fire, motor vehicle). Over the past five years, FICCO’s loan releases to members totaled to over P 25 billion.
FICCO also recently started providing the following services: fleet card (with tie-ups with Shell and Petron), SM e-card, gift checks from leading supermarkets (SM, Gaisano, Ororama, NCCC), Globe g-cash and e-load.
ICFS, an ambitious goal
One of FICCO’s major concern is over-liquidity. Members trust FICCO and through FICCO, they were able to build up their financial resources. However, once they achieve financial sufficiency, they stop borrowing or borrow only when they expand their businesses, and yet they don’t stop increasing their capital and savings. Thus, the over-liquidity of FICCO. In response to this problem, FICCO sought investment opportunities, even offering to buy the Cagayan de Oro Water District. The offer was turned down, and this give birth to the ICFS idea.
Since 2007, FICCO spearheaded the setting up of an integrated coop financial system (ICFS) whose components include one coop bank, one coop insurance and one coop asset management and investment company. This led to the take-over or significant investments in the following coop banks: Misamis Occidental Coop Bank (MOCB), Coop Bank of Davao Sur (CBDS), Coop Bank of Surigao Sur (CBSS), Metro South Coop Bank (MSCB), Bataan Coop Bank (BCB) and Coop Bank of Palawan. MOCB, CBDS and CBSS were consolidated into Consolidated Coop Bank with resources totaling P 1.36 billion. In process is the merger of MSCB and BCB to CCB. The next step will include other coop banks until, hopefully, there will only be one cooperative bank of this country (instead of the 30 or so, more than half of which are weak).
In July 2013, FICCO infused P 83 million in capital to CISP (Coop Insurance System of the Phils), a cooperative life insurance about to be closed by the Insurance Commission for capital deficiency. In 2014, CISP reported a P 62 million in net income and declared 13% dividend despite appropriating 40% of distributable surplus as experience refund.
The takeover of CISP is part of the goal to unite the two coop insurance companies in this country, plus a few coop mutual benefit associations (MBAs). Thus FICCO invested in and is the third biggest stockholder in CLIMBS (CLIMBS Life and Gen Insurance Coop) and the majority owner of CISP (Coop Insurance System of the Phils). Its members also own the FICCO MBA. We hope to merge the three entities, unfortunately CLIMBS is having second thoughts. Thus, in 2015, we can only merge FICCO MBA with CISP.
In 2009, through the initiative of the National Coop Movement, seven leading coops and one NGO established the NCM Mutual Fund with FICCO putting in 45% of the initial capital of P 100 million. This mutual fund has now grown to over P 600 million owned by more than 60 coops, with FICCO maintaining its hold of almost 50%. The purpose of the NCM MF is to pool excess funds of coops for investment in equities and fixed income funds. Once this fund reaches P 1 billion, the putting up of a coop investment company will be explored.
The following programs or projects are now being pursued:
- Mobile banking and money transfer. With its new computer program in place and its connectivity being addressed, FICCO hopes to bring mobile banking, money transfer and ATM services to its members. With its network of 74 offices, plus the 10 offices of CCB, FICCO will surely make an impact in terms of advancing member services. It also hopes to establish a network for these services involving other coop networks.
- Risk protection, both life and non-life. Even if the merger with CLIMBS will not push through, the merger of FICCO MBA (with assets of P 390 million as of end 2014) to CISP (with 2014 assets of P 401 million) will create a robust coop life insurance that can easily rival with CLIMBS. FICCO also intends to buy a non-life insurance company to complement CISP.
- Palay buying. FICCO will expand and go full throttle with its palay buying (from farmer members) business piloted in Maranding, Lala, Lanao del Norte, wherein the purchased palay are milled and sold directly to FICCO members. This program was replicated in Bukidnon in 2014 and in Agusan del Sur in 2015. This enterprise benefits both the farmers and the consumers who are all FICCO members.
- Baboy na walang amoy. Also pilot tested in 2013 is for farmer members to engage in backyard piggery using especially formulated, anti-biotic free feeds that emits no unpleasant smell, with the pork product containing less fat. This program will be promoted to more farmer members. We will also encourage member vendors to be outlets of the produced meat.
- Condominium and housing subdivision. FICCO has two small housing subdivisions, a five-hectare fully sold-out one in Cagayan de Oro and another five-hectare in Davao City. The latter is still embroiled in litigation involving few lots but majority of the lots that were sold to the members are either updated in payments or fully paid. Still FICCO intends to pursue this program that provides decent homes to members. It is also at present planning to put up a condominium in Cagayan de Oro. If accepted by the members through pre-selling, this condo will be a twin-tower with 10-storeys and 160 units.
- Non-life insurance and health maintenance cooperative. If the merger of CLIMBS will push through, FICCO need not buy a non-life insurance company. It will rather avail of that services from CLIMBS. If not, then FICCO will have to buy one to complement its life insurance arm, the CISP.
FICCO also participated in organizing a health maintenance coop that will tie up with Medical Mission Group Hospital coops in the country, as well as other accredited hospitals. This move will make available affordable health maintenance services to its members, especially those who have less access to this type of service.
- Funeral care service. FICCO is majority stockholder of the Memorial Service Coop Federation, owning as much as 94% of it. FICCO will expand the reach of this service with tie-ups with existing funeral service providers wherever FICCO offices are situated.
- Philippine Cold Chain Program. Designed to uplift the situation of fisher folks and farmers of Caraga Region, FICCO is tapped as credit conduit with the US Dept of Agriculture and the Winrock Foundation providing credit guaranty. This program aims to improve the productivity and marketing capability of the farmers and fishers of the said region. The USDA budgeted some $1.7 million for this program.
FICCO aims to improve the financial literacy of the farmers and fishers, and will also bring in its palay buying and “baboy na walang amoy” project to them.
The possibilities are actually limitless for FICCO so long as it maintains the trust and confidence of its growing membership. So long as the members, management personnel and the volunteer leaders of FICCO continue to imbibe and internalize its culture, FICCO will continue its coop leadership in the next 50 years.
In the meantime, the over liquidity issue persist and FICCO is hard put to find investment opportunities that will help augment its main sources of revenues so that it can continue providing expanded services and good returns for its members.