Digital Automation Providing Credit Unions New Life, New Opportunities
By Seth Brickman, CEO, QCash
October 6, 2023
Anyone who has been in the financial services industry the last decade has witnessed the bright, and to some, intimidating, light that is fintech dominating the banking landscape and testing each institution’s financial investment in their institution’s consumer experience.
Some in the credit union movement remain skeptical with the perceived competition they feel is inevitable with fintech companies and the advantages that digital automation provides. What those concerned executives don’t realize is that some of those fintechs’ actual business models are dependent on partnering with credit unions. Their good-faith aim is to create relationships that faithfully serve both the members and their cooperative’s short- and long-term financial inclusion and economic interests.
In this month’s entry for the QCash and CUNA Strategic Services joint series, “The Case for Small-Dollar Loans,” we discuss the bottom-line effectiveness automation provides credit unions and the life-changing difference it can make for their members.
Fintech Automation, and the Stories It Can Tell
The best fintech is that which consistently serves a specific member need with minimal user input, employing automation that requires little to no credit union staff involvement. But in order to truly serve the needs of a credit union and its community through, say, small-dollar loans, the institution must be empowered to maintain control of the platform with the flexibility digital automation provides in making fast, timely, and thorough decisioning.
You don’t have to remind Afena Federal Credit Union CEO Karen Madry of the difference digital automation inspires in fundamentally changing the lives of her cooperative’s members and the benefits it brings to the institution.
Speaking at the Credit Union Leadership Symposium in early September in Las Vegas, Madry described the daily challenges with outdated manual small-dollar loan programs. “I asked my loan officers how much time it was taking to (approve applications for loans), and they said anywhere from 30 to 45 minutes.”
In the “before times,” to say small-dollar lending results at Afena were unfulfilling would be an understatement. During their peak Christmas season, Afena’s former manual PALs program would provide the credit union with what one may consider “modest” results. Their portfolio size throughout the year? Pretty much the same.
Upon launch of their new automated digital small-dollar loan product, the results were immediate. “We are new to QCash; we launched on April 17th (2023). We received an email that said, ‘Hey, your QCash app is turned on.’ (That) email came in at 7:58 a.m. At 8:01 we had funded our first loan for $300.
“We are now funding (our previous annual totals every month) in our Afena ‘Fast Cash’ loans. Our portfolio (now features) a 367 percent growth from March to now. We foresee it continuing to grow.”
Afena noticed with pride how that first applicant was correctly using Fast Cash in the manner the staff was instructed to educate members on the product. This member who took out that first loan ended up taking out multiple loans and paid them back in full, all in the effort to get through to payday.
“This was a member that we would see overdraft charges for courtesy pay, and they’re disappearing. You know what? I’m okay with that. Some people would say, ‘Wait a minute, you’re missing $30 a pop!’ I don’t see it that way. I see us doing what we want to do, which is to find a smarter way to manage their finances."
That is the spirit that automated digital small-dollar lending encompasses, and the results the product rewards for those who both employ and use it. Automation is non-discriminatory, including terms that encourage financially-inclusive ideals that remain consistent with every member.
As with that first Afena FCU Fast Cash borrower, due to digital automation, the loan was convenient, timely, and impactful in addressing that member’s financial emergency and providing him a bridge to his next pay day.
If entering a new, more successful era of digital automation for your small-dollar loan program sounds good to you and your credit union, connect with QCash.
QCash Financial offers relationship-based small-dollar loans. The CUSO’s lending platform enables credit unions to help their members responsibly when they face financial challenges from unexpected life events. From application to account funding, the process is complete in under 60 seconds, no credit check required, and completely digital, needing no effort from staff. When life happens, be there for your members anytime, anywhere and from any device.
Ready to level-up your members’ experience? Consider Life Event, Specialty, and Financial First Responder Loan programs, all using QCash’s patented relational underwriting.