How Do QCash Small Dollar Loans Help Member Health?

Payday loans have not been received very favorably recently, by either the general populace nor by the legislature. And yet, at QCash, we still see small dollar loans as an important aspect of credit union member health. Why do we continue to hold this viewpoint?


We understand that financial health means different things to different people. Recently, we read a study that claimed that around 44% of Americans couldn’t come up with $400 cash in an emergency. To us, this indicates that most Americans do not have access to an extra influx of money to aid them with anything that might come up. While we might most often think of financial health as a product of income, savings, wealth management, and planning for the future, we know that for many people it means having flexibility and options. They want to know that, regardless of their cash flow, if something comes up that requires a little extra money, they’ll be able to take care of it.

Financial Health is a Road Trip

Everyone’s destination is a little bit different. In the game of Life, some of us want to retire to Millionaire Estates, while others want to retire to Countryside Acres. How we get there will differ, and how the game ends may also be a little different, but in the end, we’re working toward the same goals: a happy life with enough financial stability that can last us.

The road to financial health is also littered with obstacles, pit stops, detours, and—we hope—a few great restaurants. We keep in mind that many hard-working, responsible Americans sometimes struggle to cover sudden costs or loss of income stemming from medical emergencies, car troubles, and job transitions. In such times, it’s better to have options. Safe options. Options that don’t come at the predatory rates endemic to payday loan centers. Options presented by the same people who provide their other banking services. Options that come with the comfort and security that only their credit union can afford them.

Each member’s route to financial health is unique, so we want to offer as many possible routes to success as we can. Whether someone needs it or not, having access to an emergency small dollar loan has helped thousands of credit union members per month. It’s not just for the foreseeable obstacles that pop up—it’s for the nasty surprises. Members can get small, fast loans when they need them most.

Institutional Health

 At QCash, we also consider small dollar loans a boon to credit unions. It expands the portfolio of services that they can provide, and it keeps credit union members from jeopardizing their financial health by pursuing loans at less-reputable payday loan centers.

We’ve proven that the loans we provide, at the rates we suggest, are a net positive for credit unions. Our service is faster and requires less overhead than traditional payday loan services, which allows us to offer little lifelines to those in need. Nevertheless, we emphasize the financial health of your members, because we understand that healthy members mean a healthy credit union.

 

Are QCash and Payday Loans the Same Thing?

What are the Benefits of Credit Union Payday Lending?

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What are the Pros and Cons of Partnering with QCash Small Dollar Lending?

Introducing any new technology to a tried-and-true sector is a recipe for radical change. Generally, the change is for the positive, but that doesn’t mean that there aren’t any drawbacks to innovation. The question is when partnering with financial technology companies, what do you give, and what do you get?

When you’re on the front lines of innovation—the cutting edge, if you will—adaptability is key. At QCash, we understand that strategy, technology, and evolution are primary concerns for staying alive and viable. Imagine our surprise, then, when we heard about the new battlefront technology: the double-edged sword. A blade that drastically increases versatility, but that also cuts both ways. It was a game changer, to be sure; however, it presented ways to hurt us as well, if we weren’t careful.

Fortunately, with respect to financial technology, we’ve had time to understand a little about double-edged swords. We realize that we can’t continue to provide bleeding-edge, innovative technology and services without disrupting elements of standard banking and credit union operations. With that said, let’s take a look at the drawbacks of partnering with an experienced fintech company.

The Cons of Partnering with QCash

Part of the digital transformation package means embracing new technology. Before we talk about how that benefits you, we should consider the full impact that it might have.

Whereas most credit unions may be accustomed to learning new processes and practices every so often, fintech companies focus only on providing value through the specific services that they provide. As a result, they learn to reimagine, fine tune, and change gears quickly. New developments come faster than regulations do. Often, a fintech company will implement new technology or protocols every 45 or 90 days; many credit unions are used to adapting to new things only every six months or so. This can present a significant increase to changes to workload or style for credit unions.

Essentially, the downside to partnering with a fintech like QCash is that we tend to push forward rapidly with innovation, which can require testing, education, and fine-tuning. Consistently reevaluating best practices isn’t easy. The pace can be rather fast.

The Pros of Partnering with QCash 

The pros of partnering with a fintech largely speak for themselves. Fintechs provide access to data, services, protection, planning, and more, all that wouldn’t be available or feasible otherwise. With QCash, we offer small-dollar loans at reasonable rates to help protect your members from predatory payday lenders who charge exorbitant interest rates. We also do it with a high degree of demonstrable protection and moderate benefit to your credit union.

Beyond that, fintechs like QCash offer something a little less tangible, but no less important. First, we can help you get to market to serve your members faster than you could do yourself. Developing and testing new technology takes time when you have so many other things to consider, so fintechs are able to focus intensely on perfecting the service or product at hand.

Fintechs also ensure that their products and services are highly integrated so that credit unions are able to focus on daily operations rather than worrying too much about the development and integration of new technologies. They package their offerings so that they have a minimal net impact on day-to-day minutiae, but a maximal positive impact on productivity and member services.

What Interest Rate Should a Small Dollar Payday Loan Program Charge?

QCash Payday vs Small Dollar Loans: What’s the Difference?

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How Does QCash Partner with Fintechs?

In the world of financial technology, it’s important to know that companies can form partnerships to better serve their clients. So how does QCash partner with other fintech companies?

Imagine a world where fintech companies received report cards. Not just the usual A, B-, C+, or D nonsense, but a report card with healthy evaluative comments on it. Both in preschools and in elite academic institutions, we know such methods of evaluation are still alive and well. While it’s certainly easy to take comfort in the knowledge that it’s possible to receive a passing grade by keeping your nose down, working hard, and offering consistent, dependable work, there’s always that last area: group projects. Group projects demonstrate the ability to communicate effectively, manage shared goals, and build something larger and more comprehensive, in a shorter timeline, than would be feasible by a lone wolf.

Most people don’t like group projects in school because students are notorious for bringing different levels of energy and care to a job. Fortunately, the professional level at which we operate is replete with dedicated professionals with skin in the game. We at QCash believe that the ability to work closely—and partner—with others in the financial industry is paramount to providing seamless, integrated solutions to credit unions members nationwide. We’re certain that, were we to receive a written grade, it would say that we have a strong ability to facilitate effective, mutually beneficial group work (or, in preschool terms, that QCash “plays well with others”).

What Do Fintech Partnerships Accomplish?

We understand that other fintech Credit Union Service Organizations (CUSOs) can partner for various reasons. We see synergies in the solutions that different companies provide. In areas where companies dovetail, the may be able to work together to offer a new service that would have taken too many resources to do in-house.

For example, we look to provide small-dollar and payday lending that benefits both credit unions and their members. This requires that we minimize the amount of overhead required to evaluate and approve loans. We’ve talked with several alternate data providers about how to tweak operations for underwriting loans, which will allow us to better service new members and streamline the loan process. We’ve found that working with other fintech companies allows us to identify new ways we can serve our clients.

Ideally, strong partnerships among fintech CUSOs result in complementary products and services: one picks up where the other leaves off. QCash is poised to utilize the work of many other fintechs and, in return, make their products more actionable.

Examples of Working Partnerships

 We’ve already mentioned our relationship with data companies and how they help us better underwrite small-dollar loans, but our partnerships don’t end there. We also talk with international financial companies—with Canadian fintechs, for example—to see how we can expand our service. Another organization we’ve worked with is OnApproach. By connecting with their data lake, and through leveraging their newly released app store, we’ve looked into creating a QCash app that’s accessible to their clients.

We appreciate working with other fintech companies because, although we know we provide a good service on our own, we know that we can often build something stronger together. Through mutually-beneficial, complementary capabilities, we can provide solutions that do more and reach further. An A+ isn’t enough. We also want “plays well with others.” It’s better for everyone.

What is a Small Dollar Loan?

Payday Loans Good or Bad for Borrowers?

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What are the Benefits of Credit Union Payday Lending?

People sometimes ask me, “Why did you get into payday lending?” In fact, I’ve had people ask me why I was crazy enough to get into payday lending.  If you think your members have a need for small dollar loans – this blog covers the benefits of credit union payday lending!

The reason is member need. At WESCU, we noticed that members were transferring large amounts of money to payday lenders. It was over a million dollars a year, and that was 15 years ago. It’s even more today.

Benefits of Credit Union Payday Lending: For the Member

The more we studied it, the more we learned how expensive it was. We learned that people were being trapped in payday lending. So we said, “Hey. We’re a credit union. We’ll make small loans.”

Credit unions, philosophically, started by making small loans to average people; so, we decided this is was the direction to go. Fortunately for us, we had a board member whose brother was a pawn shop owner. He was very, very connected to the industry, knew a lot about it, and was instrumental in the organization of this project. He convinced the other board members it was a good idea.

We definitely had our share of naysayers. But I’m a persistent fellow and the more that people said, “You are crazy. You shouldn’t be doing this,” the more I said, “I’m going to show you guys.”

At first, it was a paper-based and very labor intensive process. We were trying to help our members find a better and cheaper alternative, and then later mainstream them into more traditional lending. Eventually, we got better and better at it. We hired the right people and we started on the project. We made it faster. We got it onto a computer. Then, we added mobile technology. We realized, as we watched the activity of our QCash loans, that speed was everything.

Benefits of Credit Union Payday Lending: For the CEO

If you’re a CEO who is thinking about QCash, your job is to serve your members. With QCash, you may be targeting a market that you don’t traditionally serve, and that’s going to open up a lot of possibilities for you. QCash will help your organization learn about technology, data analytics, mobile technology and product design. The kind of competencies an organization will learn go far beyond the actual business results of the payday lending.

And then there’s the bonus that Qcash accounts for 20% of WSECU’s net income. You must think about small dollar loans from a business perspective as well.

Payday lending has been a great thing for us and our staff. They feel like they’ve got another tool with which they can help members. Our dream is to put all these together in a cash management electronic product, and we’re working on that dream very hard right now. We want to put all these ideas together into one global product.

QCash helps WSECU members with their needs today. And, it enables us to be constantly pushing the use of technology to speed up, digitally engage and lower the cost of helping our members. That’s a very convincing business proposition.

By Kevin Foster-Keddie, CEO of WSECU
April 26, 2018

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Why did WSECU Start Offering Small Dollar Loans?

Why did WSECU start offering small dollar loans? 

How did QCash begin? It’s an excellent story about a front line employee living the motto of people helping people.

Our story begins when a teller at Washington State Employees Credit Union, the credit union that owns our CUSO, that members were coming into the branch repeatedly for money orders. Money orders aren’t anything to be concerned about, but our teller noticed one very important thing: those money orders were then used to write other money orders to payday lenders.

 We didn’t know anything about payday lending at the time, but thanks to WSECU’s empowered culture, the teller told the credit union CEO about what she observed. Our CEO then put together a small group of big, bright minds to figure out what was occurring and how WSECU could help.small dollar loans

What the credit union discovered was its members were using predatory payday lenders to meet their short-term, small-dollar needs. WSECU decided they not only needed to help their members, but short-term lending was something credit unions could and should do.

And, not only can WSECU short-term, small-dollar loans save members money, they can simultaneously create a new, revenue stream for the credit union.

And so, 14 years ago, QCash was created to provide short-term, small dollar loans to WSECU members.

As QCash began to gain local market share, the credit union began to wonder, “if we are changing the payday lending landscape in the state of Washington, where else could we go? How might we be able to share this with the credit union community and change the landscape across the country?”

WSECU didn’t know the answer to that question, but decided to give it a shot. And so, in April 2015, QCash Financial was born and began delivering short-term, small dollar loans to other credit unions and banks, in hopes of meeting the needs of other consumers the same way WSECU has helped its members.

And that’s the story of how QCash has grown from one teller’s thoughtful observation to a CUSO that has sparked a short-term, small dollar lending movement.

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By Ben Morales, CEO of QCash Financial [April 2018]

Ben Morales is the CEO of QCash Financial. QCash Financial is a CUSO providing automated, cloud-based, omni-channel small-dollar lending technology that enables financial institutions to provide short-term loans quickly to the people they serve. QCash Financial, a wholly owned subsidiary of WSECU in Olympia, Wash., started as a short-term loan solution for the credit union’s members in 2004.

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