Innovation

The innovation began when it was decided that the model was a credit union. Service level agreement is set to give the satisfaction level for the saving and lending. HOBAS CU also has some products that encouraged members in doing the saving and lending. Currently HOBAS CU is preparing an online system to enable the members in accessing their saving and lending account through their gadgets or laptops.

Inspiration

Every start-up business has its own story. Hobar has its own special challenge when registering and building trust among the potential members of the credit union. HOBAS Cahaya Utama (HOBAS CU) is credit union located in Cililitan, East Jakarta with the purpose of empowering the local community in managing funds which are collected from the members. They are enthusiastic when they are starting up HOBAS CU in 2015. As Raliansen Saragih, chairman of supervisory HOBAS CU, said "this credit union was established based on the same economic interest".

HOBAS CU is present to increase the community welfare and provide services to the members and community professionally. It is an open organization from all element of the community. The members are not distinguished based on the tribes, religion, or political view. Based on the current situation, there are some forms of cooperation or credit union that are not managed well and the experience is stagnant or slow. The decreasing level of trust toward the credit unions governance existed since members are excluded in relevant decision making. HOBAS is trying to face the challenge by building business process which has a standardized service level agreement. The goal is to give impact on the trust and confidence among the members and potentials members.

Currently HOBAS CU is preparing online system to enable the members in accessing their saving and lending account through their gadgets or laptops. Eben Saragih, Chairman of the Board HOBAS CU, mentioned that HOBAS CU has missions to provide financial service and basic needs, and develop circumstances of helping each other. It has been a common story for some of the rural residents which have limited access to the bank for lending purposes. HOBAS CU is present to facilitate funding for the member when they need cash for business or consumption. They see that the credit union could grow together and could reach the economics of scale. It seems like this organization could grow and achieve 1,000 registered members for the years to come. Economic of scale is very important in order to be efficient in the operational expenses. It could be reflected in net interest margin and net profit that is contributed back to the members.

This is the second year of the establishment of the credit union which in my opinion has shown some achievement such as the increasing of the number of members up to 150 people, and increasing frequency and amount of lending and spending. HOBAS CU implemented credit union business model. This model are developed for the combination of spending and lending. They are proud that the community based in Cililitan would be a model for other people or community who needs to develop communal funding. The impacts are first, helping the members in funding the business and consumption. Second, develop the way community is helping and growing together with potential sources among the members. Third, supporting through coaching and training regarding credit union and financial planning and control in the scope of households. Saving attitude is the important point that is campaigned by HOBAS CU. Saving interest are set higher than the saving deposit that are offered by commercial banks. Members are encouraged to save on a regular basis or monthly bases. By allocating some of their income to HOBAS CU account is considered as investment for the future. The challenge is in achieving significant fund and scale of economic in order to give benefit to the members.

Lending is also major aspect in running credit union. The local community are still dealing with the local retailer creditors by setting high interest margin with a tight collection scheme. HOBAS CU promoted credit for business purposes dedicated to the entrepreneurs. Some members of HOBAS CU are running the business such as retailers of consumer goods, fashion, bags or suitcase in the international trade centers. The need of funding for operational and inventories could be supported by HOBAS CU. They still experience the hardness of lending some loan to the local bank since they could not pass some qualifying requirements for some reasons. HOBAS is in line with 5C which are Character, Capacity, Capital, Condition, and Collateral in processing credit. As the shareholders are members of the credit union, we could do close monitoring of the collection. Since the debtors are members they intend to pay the installment payment on time. Saving and Lending are two main process that should be well and balanced managed in order to achieve efficiency and increase the benefit that will be delivered back to the members.

Overall impact

The impacts are first, helping the members in funding the business and consumption. Second, develop the way community is helping and growing together with potential sources among the members. Third, Delivering coaching and training regarding credit union and financial planning and control in the scope of households.

Business benefit

Economies of scale are very important in order to be efficient in the operation expenditure. It could be reflected in net interest margin and net profit that is contributed back to the members. Saving and Lending are two main process that should be well and balanced managed in order to achieve efficiency and increase the benefit that will be delivered back to the members.

Social and environmental benefit

The local community are still dealing with the local retailer creditors by setting high interest margin with tight collection scheme. For example members of HOBAS CU are running the business such as retailers of consumer goods, fashion, bags, or suitcases in the international trade centers. The need of funding for operational and inventories could be supported by HOBAS CU.

Interview

Eben Saragih, Ketua Pengawas, Ketua Pengurus HOBAS CU