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After Record Loans in 2022, Digital Lending Automation Saving Members’ Financial Lives

By Seth Brickman, QCash, CEO
November 14, 2023

For the last half of the year, the QCash and CUNA Strategic Services joint series, “A Case for Small-Dollar Loans,” has addressed several areas concerning the benefits credit unions and their members receive when your cooperative implements a small-dollar lending program. This month, we tie it all together with a broad view showcasing examples of why your credit union and members need a small-dollar loan program for your institution.

The numbers have only begun to come in after the last year or two proving the viability and efficiency that comes from digital lending. New data coming out of 2022 from the National Credit Union Administration (NCUA) revealed that credit unions issued $227 million in loans through the NCUA’s payday alternative loan (PAL) program, obliterating the prior record of $174 million set in 2019 by 30 percent.

In this decade of fluctuating inflation, warring nations affecting economies worldwide, and frustrating industrial uncertainties like company strikes here in America, consumers and hardworking families are showing that small-dollar loans remain an essential tool of financial stability, inclusion, literacy, and education in the 2020s.

This rise in accessible and automated small-dollar loan solutions like QCash benefits credit union members and consumers because each loan reflects the hundreds to thousands of dollars in possible savings in contrast to the predatory high-cost loans coming out of payday, check-cashing, rent-to-own, or comparable bad faith outfits.

This growth in small-dollar loan use – particularly through digital fintech tools employing accurate, comprehensive, 360-degree qualifying evaluations – enables more members with little-to-no credit history to successfully borrow money quickly to cover such pressing expenses as monthly bills and unexpected emergency expenses, all while avoiding those financially unhealthy and costly alternatives.

Small-Dollar Loans Speak Efficiency for Credit Unions and Their Members

And for anyone who doubts the foundational product’s vital importance to both institutional and member health, Alloya Corporate FCU’s annual Credit Union Executive Leadership Symposium held in September in Las Vegas had the receipts.

During a Symposium breakout session, Astera Credit Union’s senior vice president of Lending Laura Blanding offered an impactful accounting of her cooperative’s journey to the QCash platform and its newly established Snap Cash Loan program. “[Prior to Snap Cash,] we had a similar product, unsecured, up to $1,000, that was a manual process for acquiring those types of loans for individuals,” Blanding shared. “But there were inconsistencies in the underwriting, and there was the time it takes to come in, sit down, and speak with a loan officer.”

Through a convoluted loan process going from one staff member to another, Blanding claimed “there were a lot of inconsistencies in the decision-making. So going to Snap Cash where you had that automated underwriting in place, members would know whether they were going to be approved or denied within 60 seconds, 24 hours a day, seven days a week. And the funding is immediate, so it’s just a better product, a better fit for our members for what we wanted to offer.”

Complementing Laura Blanding’s message at the Symposium was Afena Federal Credit Union CEO Karen Madry, whose member stories reflected the difference digital automation inspires in fundamentally saving the financial lives of her cooperative’s members and the benefits it brings to the institution.

Madry recalled the uplifting story of a woman who frequented Afena’s PAL program. As she walked in for yet another PAL, this time the stakes were much higher. She was in a last-ditch effort to get emergency custody of her grandchildren.

“Her daughter had been arrested, and her kids were in the custody of the state,” Madry explained. “She needed attorney’s fees to go in to get custody.” The woman said she knew, based on the way the PAL works, that she wouldn’t have enough.

“[In response,] our loan officer sat down and asked, ‘Have you heard about Afena’s new Fast Cash loan?’ ‘Well, I’ve seen it advertised on the TVs,’ the member said, ‘but I didn’t know what it was.’ So the loan officer pulled up a chair, sat down beside her, had her pull out the [Afena] app, log into home banking, and walk her through the application. She was approved for the entire amount of $2,000, which was exactly what she needed to pay that lawyer.

“She cried, she thanked us, [and] she came back and shared with us that she did get custody of her grandkids and told us that we made a difference in her grandkids’ [lives]. Because it would have killed her to find out that her grandkids were with someone other than her.”

Digital small-dollar lending platforms like QCash CUSO remain the answer to those cooperatives’ challenges and the life challenges experienced in their communities. When members needed to cover urgent expenses or sudden, unexpected emergencies, they often declined to use such credit union-backed loans in part because in the past they had to submit in-person manual applications. Today’s upgraded, forward-thinking credit unions who implement automated fintech loan platforms no longer use a credit report. They instead examine such eligibility requirements as account history, deposit consistency, and interactions with the cooperative, overall, to determine loan approval.

At the same time, while the number of credit unions across the nation is increasingly automating small-dollar loans and reaching all-time highs, according to Pew Research in March 2023, a review of the 40 largest credit unions found that only seven of them provided their members with automated small-dollar loans.

While advancements in CUSO fintech have been made in this area in the last couple years, the reality is the credit union movement still has a good way to go to achieve healthier financial inclusion measures for low- to moderate-income communities. As the stories shown above explain, however, we have the fintech solutions to help both your credit union and your members. The question remains: Who wants to put them to work?

If entering a new, more successful era of digital automation sounds good to you and your credit union, connect with QCash to learn more.

About 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.