Difference between credit cooperatives (SACCOs), microfinance institutions (MFIs) and banks

I’ve been asked about a zillion times what is the difference between savings and credit cooperatives (SACCOs), microfinance institutions (MFIs) and commercial banks. I’ve never had time to reply properly but now I came across this table from the World Council of Credit Unions (see below) that summarizes the differences in very simple terms. If there are other issues not included in the table (I’m sure there are tons), please write them down in the comment section.

	Credit Unions	Commercial Banks	Other Microfinance Institutions (MFIs)
Structure	Not-for-profit, member-owned financial cooperatives funded largely by voluntary member deposits	For-profit institutions owned by stockholders	Institutions typically funded by external loans, grants and/or investors
Clientele	Members share a common bond, such as where they live, work or worship. Service to the poor is blended with service to a broader spectrum of the population, which allows credit unions to offer competitive rates and fees.	Typically serve middle-to-high income clients. No restrictions on clientele.	Target low-income members/clients, mostly women, who belong to the same community.
Governance	Credit union members elect a volunteer board of directors from their membership. Members each have one vote in board elections, regardless of their amount of savings or shares in the credit union.	Stockholders vote for a paid board of directors who may not be from the community or use the bank’s services. Votes are weighted based on the amount of stock owned.	Institutions are run by an appointed board of directors or salaried staff.
Earnings	Net income is applied to lower interest on loans, higher interest on savings or new product and service development.	Stockholders receive a pro-rata share of profits.	Net income builds reserves or is divided among investors.
Products & Services	Full range of financial services, primarily savings, credit, remittances and insurance.	Full range of financial services, including investment opportunities.	Focus on microcredit. Some MFIs offer savings products and remittance services.
Service Delivery	Main office, shared branching, ATMs, POS devices, PDAs, cell phones, Internet	Main office, shared branching, ATMs, POS devices, PDAs, cell phones, Internet	Regular visits to the community group

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