FAQ CASE STUDY | QCash Digital Lending Platform

Q-Cash Client Case Study FAQs –

• • What is the client case study?

    The client case study is an overview of Q-Cash’s short-term small dollar program implemented at the Washington State Employees Credit Union, the second-largest credit union in Washington State. It provides an overview on the value proposition for members, mission, and margin, the products, performance metrics and member and community benefits gained from over 11 years of successful operation. For more information, contact the Q-Cash team.

  • How did the client case study determine if customers were using payday lending?

    Client case study tellers and accounting services noticed members obtaining cashier’s checks made payable to payday lenders. A team worked with the accounting department to filter reporting to members linked to payee names. Customer relationship management research ran cross-reference reports of payday lenders against automated clearing house payments made, resulting data was analyzed and assessments were made in support of payday lending alternatives.

• Is there a typical Q-Cash client case study member profile?

  As the following numbers suggest, having ongoing needed liquidity is a concern all members have. Typically, 24% of client case study members aged 40-49 used Q-Cash, followed by 22% in the 50-59 bracket, 21% in the 30-39 group, 17% in the 60+ group, and 15% in the 18-29 group.

  For 2015: There were 3,007 Q-Cash households with an average of 4 services per household, average deposit balances of $1,615 and average loan balances of $12,731. There were also 4,402 Q-Cash Plus households with an average of 4 services per household, average deposit balances of $2,005 and average loan balances of $14,298.

  For 2014: There were 2,740 Q-Cash households with an average of 4 services per household, average deposit balances of $1,513 and average loan balances of $13,018.

• What is the client case study’s financial performance with the Q-Cash platform?

  For 2015: The case study processed 34k loans, funding $28mm, generating $3.0mm net income for 2015
  with a net margin of 11% and still over $4.0mm in member savings over payday loan alternatives since
  2004. Q-Cash achieved a 7.7% market share and remains as the most profitable overall loan type in the
  portfolio.

  For 2014: The case study generated $3.5mm net income for 2014 (16 bps return on assets). Using an
  industry average payday loan amount and annual percentage rate, the Q-Cash program had a 5.6%
  market share and has saved members $4.1mm since 2004.

• What is the client case study’s monthly loan origination volume and portfolio size?

  The case study has more than 11 years of loan origination and portfolio history.

  For 2015: Q-Cash funds $982K/month with funded loans totaling $11.8mm for the year. Q-Cash Plus funds $1.3mm/month with funded loans totaling $15.7mm during the same time period.

  For 2014: Q-Cash funds $970K/month with funded loans totaling $11.4mm for the year. Q-Cash Plus funds $1.1mm/month with funded loans totaling $12.8mm during the same period.

• What is the client case study’s approval rate?

  Q-Cash’s case study approval rate is 70% or higher for both Q-Cash and Q-Cash Plus.

• What are the client case study’s Q-Cash and Q-Cash Plus delinquency and loan loss ratios?

  For 2015: Even though the case study expanded its field of membership and revised processing, collections policies and underwriting management in 2015, the Q-Cash combined delinquency (3.2%) and loss rates (12.7%) continued to be significantly lower than most payday lending services (which are typically 20-25%).

  For 2014: The Q-Cash delinquency (2%) and loss rates (6%) were significantly lower than most payday lending services (which are typically 20%-25%). Further, loan losses through 2014 have been consistently in the 6%-8% range. The parameters of the decision engine are highly configurable and can be modified to achieve the unique needs and objectives of each credit union. Using client case study insights gained from over 11 years as guidance, the Q-Cash team can help you with implementation to promote the success of your program.

• What are the client case study’s member requirements for Q-Cash eligibility?

  To join Q-Cash, the client case study required a member relationship with a deposit account (savings, checking, or a money market account). Direct deposit and length of relationship are not requirements, but are variables considered as part of the decision engine and are scored and weighted differently. Once a member/customer applies and is underwritten through the Q-Cash decision engine, the result is a number in a scoring matrix that ultimately determines the approval or denial, product loan type eligibility, loan amount and/or term.

• What percentage of the client case study’s members use Q-Cash?

  Q-Cash is a niche solution targeted to the underserved, younger members with no or thin credit files, wealthy-cash-to-mouth members, and those in-between who live check-to-check and have cash flow liquidity needs. Roughly 5% of members use Q-Cash, but this number can be significantly higher with additional education and communications.

• What percentage of the client case study’s volume is online and/or mobile?

  Members appreciate the ease and speed of the mobile app as the primary way to apply for the loan. The client case study’s online/mobile channel volume is 71% for Q-Cash loans and 74% for Q-Cash Plus. 18% of applications come through the contact center and 11% come through the branch network.

• How does the client case study market Q-Cash? Are marketing support and templates provided?

  The client case study primarily relied on word-of-mouth with minimal marketing support to promote QCash. However, Q-Cash can be marketed through multiple channels including the website, online banking, mobile, branch, and contact center. A variety of marketing tools can be used including events (webinars, webcasts, symposiums, executive briefings, speaking engagements, roundtables, and workshops), newsletters, articles, case studies, white papers, research reports, email, and blogs. A white label package is available that provides essential content, yet can be customized to match the credit union’s company logos and style guide

• Does the client case study have any other “easy qualifier loans” in addition to Q-Cash? If so, did the Q-Cash loan affect its volume in other products?

  No, Q-Cash is the client case study’s primary short-term small dollar lending platform solution. Omnichannel availability, ease of application and use, independence from traditional credit score underwriting, instant funding, cost savings and processing efficiency make it a leading solution to replace similar but less effective and efficient, more labor intensive programs.

• What feedback has the client case study received from its state regulator and National Credit Union Administration

  The client case study’s chief executive officer, Kevin Foster-Keddie, is on the Credit Union Advisory Council to the Consumer Financial Protection Bureau and its Director, Richard Cordray. The Q-Cash solution aligns well with Consumer Financial Protection Bureau recommendations. The system was designed with flexibility to adapt to and satisfy regulatory requirements.

• Has the client case study experienced any lawsuits or legal challenges to the program?

  Neither the client case study nor Q-Cash have faced any legal challenges or lawsuits regarding its shortterm small dollar lending program.

• Who are the client case study’s Q-Cash references? What other information can they provide?
  The client case study references include:

  1. 1. Ben Morales, Q-Cash Chief Executive Officer and the case study’s Chief Information Officer
  2. 2. Mark Allen, the case study’s Chief Credit Officer
  3. 3. Kevin Foster Keddie, the case study’s Chief Executive Officer

  Additional information, references or a product demo are available upon request. Please contact the Q-Cash team.