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Building Trust Through Familiar Systems: Tandas
- Ethan Qian-Tsuchida
- Sep 21
- 4 min read
In underbanked communities, one of the biggest barriers to adopting formal financial services isn’t just money, it’s trust. When banks feel distant, bureaucratic, or simply aren’t structured in ways that align with people’s lived experience (language barriers, documentation requirements, unfamiliar rules), folks often rely instead on informal systems they do trust. One such system is the tanda (also known as a rosca, cundina, susus, lending circle, rotating savings & credit association).
Below, we explore what tandas are, why they matter, and how financial institutions can learn from or partner with them to build trust and better serve underbanked populations.
What are Tandas?
A tanda works like a rotating savings & credit association: a group of people each contribute a fixed amount of money regularly into a collective pool, and each cycle one member gets the entire lump sum. Over time everyone gets their turn.
These systems are deeply embedded in many cultures. In Latin America, for example, tandas are common; in other parts of the world similar systems go by names like susus, huijs, or ballot committees.
Beyond just savings, tandas serve as informal credit: if you receive your lump sum early, it’s like getting an interest-free loan from your peers.
Why Tandas Are Powerful in Underbanked Communities
Trust and Familiarity The key strength of tandas is that they are based on existing bonds: among family, friends, neighbors, or members of the same community. That means lower friction, lower cultural mistrust. When someone says "I use this because my mother did," that carries weight. According to a 2023 source, on average the nonpayment rate of tandas is less than 0.005%, while the average US nonpayment rate for a private loan is more than 300 times higher at 1.6%.
Accessibility Tandas often don’t require formal ID, credit history, or legal documentation. They often occur in the native language of participants. When banks require social security numbers, strict documentation, minimum balances, etc., many people find tandas simpler and more achievable.
Flexibility & Agency Participants in tandas decide the rules (how much, how often, who contributes, who receives when). This gives people agency to structure things in ways that match their needs. Also, receiving a lump sum at a given time helps with big expenditures, tuition, housing, and emergencies that small periodic savings can't address effectively.
Mutual Accountability Because people know one another, social consequences help enforce trust: people are less likely to default or cheat. This low cost enforcement is part of why these systems work well even without formal contracts.
Bridge to Formal Financial Inclusion By participating in informal savings and credit systems, people often build habits, financial literacy, and trust that can translate into more comfort with formal banking tools.
Examples: Where Tandas or Similar Systems Are Being Integrated
Travis Credit Union, California ran a pilot “New Era Tanda Loan Program,” where six participants contributed ~$100/month into a shared savings account. That savings was then used to secure share - secured loans of around $600. The program also paired this with financial education (Spanish-language) and institutional support.
Excluded Communities in California: In immigrant communities, Latino, Cambodian, etc.—people are using ROSCAs, tontines, cundinas, etc., because banks have excluded them either through policy (e.g. requiring documentation), distrust, or simply by not being accessible. These informal systems have allowed people to finance businesses, homes, and other critical investments.
Nonprofit Experiments: The Mission Asset Fund is a nonprofit that uses a model based on the Mexican tanda. They link community members in rotating savings associations and report that participation to credit bureaus, helping people build or repair credit, in addition to getting access to lump sums.
Challenges & Risks of Tandas
While tandas are valuable, they are not without risks and limitations:
No legal protection: If someone drops out early, mismanages the funds, or disappears, there is often little formal recourse. Mistakes or bad actors can hurt participants.
No interest earned: Unlike savings accounts in banks, tandas typically do not pay interest. Over time, inflation can erode purchasing power.
Scalability & consistency: Running a tanda well demands coordination, reliability of members, clarity of rules. For some, the cost (time, risk) is prohibitive. Also, stigma or legal concerns might arise if informality is misperceived.
Conclusion: The Path Forward
Tandas are more than just community savings circles. They are expressions of culture, shared responsibility, and trust. These systems have sustained communities that mainstream financial systems often overlooked or excluded. To truly build financial inclusion, banks and credit unions must do more than offer products, they must connect with people where they are, understand what they already trust, and adapt to those norms.
By recognizing the power of tandas, integrating their strength into formal financial products, and partnering with the communities that use them, financial institutions can bridge the gap: not just by offering access, but by earning trust. And when trust exists, access follows.
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Written by Ethan Qian-Tsuchida
Newton South High School student
Interested in finance, economics, risk management, and teaching others about fun topics to make the world of finance and economics approachable.
Email - ethan.qiantsuchida@gmail.com
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