A disappointingly large proportion of the citizens of developing countries remain excluded from services provided by formal financial enterprises. This segment of the market, often referred to as the bottom of the economic pyramid (BOP), is subjected to a host of barriers which prevent it from accessing traditional financial services. In society, money does not only represent material value, but it is also a social construct through which all members of societies express themselves. Hence these, often poor, members of developing societies consequently attain access to credit through alternative modes of financing – one of which is the financial cooperative. Financial cooperatives play a dual role in society; they provide an economic vehicle for individuals and also a platform for social interaction for its members, thereby building social capital within the society. The existence of social capital within a society increases the members’ ability to solve communal problems. Unfortunately, an inadequate amount of research has been done to aid our understanding of this, and indeed other, alternative financing models. This paper seeks to begin to address this by investigating the competitive advantage and critical success factors of financial cooperatives in Swaziland.
To this end, a qualitative research with an exploratory approach was conducted, as this approach was found most appropriate to provide new insights on the key phenomena that was being investigated. Consequently, 24 in-depth interviews at five different levels of involvement with cooperatives in Swaziland were conducted. The interviews provided rich data which was analysed using content and frequency analysis.
This study found that successful financial service providers serving the market at the BOP provide a solution that has an appropriate balance between functional and social features. Financial cooperatives as a means of financial service was found to be suitably designed to meet the needs of the underserved financial service market. The Financial Services Acquisition Journey model was developed from the research findings. In graphic form, this model offers an integrated representation on how to ensure enhanced customer experience whilst providing financial services for the underserved financial services market.