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.

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What is a Small Dollar Loan?

If you think credit unions and banks should only make large dollar loans because small dollar loans are too inefficient – then this post is NOT for you!   However, if you think you are missing a key segment or want to help your members day to day – then read this post to learn about small dollar loans!

QCash – Small Dollar Loan Basics

Life is full of surprises. Unfortunately, some of those surprises are more expensive than others. QCash loans were designed to help consumers with life’s unexpected expenses.

QCash – Small Dollar loans are convenient.

Applying for a QCash loan is fast and easy using our online application process. In many cases, you can find out whether you’ve been approved in just a few seconds. This speedy process helps to minimize the uncertainty that comes along with any unexpected expense.

QCash – Small Dollar loans are flexible.

Unlike, for example, an auto loan, a QCash loan can be used for any purpose you want. If your car breaks down between paydays, QCash is there. If your pet is injured and requires an emergency visit to the veterinarian, QCash is there. We never ask about the purpose of the loan, so your privacy is ensured.

QCash – Small Dollar loans are affordable.

QCash provides the convenience of a payday loan, but with friendlier terms. While QCash and payday loans have a couple of things in common, QCash loans are much less expensive. Plus, you have the comfort of dealing with a financial institution that you already know and trust. Just for comparison’s sake, a typical payday loan costs the consumer $15-$30 for every $100 borrowed. On the other hand, a QCash loan costs $10-$12 for every $100 borrowed. That difference can really add up.

QCash – Small Dollar Loans are designed to help consumers.

Payday lenders are in business to make as much money as possible from the people they lend money to. Yes, they may provide money when you need it, but as noted earlier, it’s very expensive money.

QCash loans are offered by your credit union. Because credit unions are not-for-profit, member-owned financial institutions, their goal is not to maximize profits. On the contrary, their goal is to help members meet their financial needs. And when those needs are sudden, QCash is the ideal alternative to a predatory payday loan.

QCash – Small Dollar Loans meet a variety of needs.

In addition to a standard QCash loan, we also offer a QCash Plus loan. QCash loans range from $50 to $700, with no credit check. These loans are instantly funded and, unlike payday loans, you have a 60-day repayment period. With a standard QCash loan, you pay just $12 per $100 borrowed.

QCash Plus loans are for amounts from $701 to $4,000. Much like QCash, there’s no credit check. However, there is a $25 application fee. Instead of paying $12 for every $100 you borrow, you pay an interest rate of 36%. That’s significantly less than the triple-digit interest rates that payday lenders charge. These loans are also funded instantly, but the repayment term depends on the amount borrowed.

QCash Plus can help you break the payday loan cycle.

It may sound odd, but QCash Plus can even help you get out of debt. Unfortunately, many consumers get stuck in a cycle of renewing their payday loans week after week, month after month. However, a QCash Plus loan may provide you with enough money to meet your short-term financial needs and pay off other outstanding debt.

QCash – Small Dollar loans are easy to apply for.

The QCash loan application is quick and easy to complete. Because we know life happens outside of credit union hours, we’ve designed a simple online application process available right on the credit union’s website. Just fill out the required information and submit the application. You’ll typically get a decision within a few seconds. And if you’re approved for QCash or QCash Plus, you’ll get instant funding into your credit union account.

QCash – Small Dollar loans are available 24/7.

With QCash and QCash Plus, credit union members get convenience, speed, and flexibility literally at their fingertips. To learn more about QCash products and how they may be able to help you in an emergency, talk with your credit union representative or simply apply on the credit union’s website today.

April 30, 2017

by Ann Flannigan, Vice President of Human Resources, WSECU

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The Importance of Promoting Small-Dollar Lending and Employee Wellness.

By Ben Morales, CEO of QCash Financial

In a recent Prudential survey regarding consumers’ perspectives on financial wellness, only 22 percent of individuals in the United States described themselves as feeling financially secure. Employers such as credit unions have a stake in this because the impact of employee financial instability does not stop at the company door. Many credit unions were and continue to be founded to serve groups of people who had a common interest or bond, such as an employer. These were called select employer groups (SEGS). Promoting employees’ and SEGs’ financial wellness should be an important business objective for credit unions, since it has a negative impact on employee productivity in the short-term, and eventually employees’ retirement preparedness. Employees without sufficient financial stability often turn to expensive payday loans to manage their cash flow issues, which eventually creates a cycle of debt that adversely impacts their productivity, morale and financial wellness.

Benefits to credit unions as employers

Many credit unions and employers in general are unaware of the potential benefits of promoting employees’ financial wellness. According to Prudential, studies have shown that better financial wellness equates to increased productivity in the workplace. Roughly 44 percent of employees worry about finances at work, and 46 percent spend between two and three hours a week on personal financial matters; see “Power of the Wellness Effect” . Financial instability also impacts employees’ potential for retirement.  In 2012, employees withdrew $70 billion in from retirement accounts before reaching retirement age. This equates to 59 percent of employers’ matching dollars contributed to those accounts that same year; “Power of the Wellness Effect“. Even a one-year increase in retirement age costs employers about as much as sick and personal leave days combined. When credit unions promote employees’ short-term financial stability, it translates to cost savings when employees get closer to retirement.

What can credit unions do?

As providers of employee benefits, credit unions are viewed by their employees as trusted partners who can help employees achieve financial wellness.  Traditional workplace benefits programs are expanding to include new, complementary financial wellness approaches.  These programs focus on foundational financial issues, such as budgeting, debt management, saving and investing, and protecting against key financial risks. Credit unions may be familiar with offering SEGs paycheck advance programs, but many organizations are unable to support them. Alliances with trusted partners to offer employee small-dollar lending programs that provide an alternative to traditional payday lending can fill this need. According to PEW Charitable Trusts, more than 12 million Americans turn to payday loans annually, demonstrating a strong need for better solutions to these expensive products.  Employees with access to instant liquidity solutions, such as inexpensive small-dollar loan products are often able to budget and manage debt more effectively.

 

Defining these goals

In order to reach financial wellness, consumers must first be in control of their day-to-day financial needs. This often involves creating monthly and annual budgets based on income and expenses, then limiting their expenditures to remain within the budget. Controlling day-to-day needs also means consumers are financially prepared to cover an unexpected expense on short notice. Many times, a one-time unexpected expense of even a few hundred dollars can completely derail this financial stability, causing consumers to turn to payday lenders for their financial needs. Achieving important financial goals of saving or making the move from renting to owning a home can often get sidetracked by these unexpected expenses, which can be compounded by the cost of payday loans. This frequently causes the next unexpected expense to have an even more profound impact. The final element of financial wellness is protecting against key financial risks, such as an economic downturn, the loss of a job or a serious illness, which is extremely difficult when consumers are living hand-to-mouth.

Short-term stability is an important element of an employees’ overall financial wellness. Employees with access to small-dollar lending solutions through their trusted credit unions have better opportunities to manage their short-term financial goals, which enables them to achieve long-term financial goals. As financially stable individuals, employees are better equipped to focus on work and can retire on time. Small-dollar lending is an important part of this equation and can have a profound impact on employees’ financial health.

 

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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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