We know it has taken a lot for credit unions to weather the onslaught of COVID-19 these last eight months. You needed all hands on-deck, socially distanced, of course, to strategize and prioritize what your team has to do to help your member community brave the rough waters to come.
For that reason, we ask once again that you consider a practical and responsible small dollar loan platform for your credit union, and take action to increase community members’ access to swift liquidity in these historically stressful days for America’s workers. So serious is this time that it took a crisis like COVID-19 to unite four federal agencies, the National Credit Union Administration, Office of the Comptroller, Federal Deposit and Insurance Corporation and Consumer Financial Protection Bureau, to issue a joint statement in August “specifically encourag(ing)” financial institutions “to offer responsible small-dollar loans to consumers” to stave off the effects of the pandemic.
With encouragement like the joint statement above, there is no better time to dust off that collective superhero suit and come to the rescue of economically struggling families around the country. Recall the Dodd-Frank provision, Section 1206, that encourages Community Development Financial Institutions (CDFIs) to establish safe and affordable small dollar loan programs. The goal was to usher consumers toward the more regulated and stable financial sector, while educating and incentivizing more affordable alternatives to predatory payday lenders. Once they have come aboard a community-based and self-funded credit union, consumers’ guided journey to financial health and wellness can steady over time and help them financially thrive.
Access to credit unions remains an important mission in 2020 going into 2021. Even prior to this pandemic that has affected virtually every aspect of daily life, more than a quarter of Americans were unbanked or underbanked. The Federal Reserve estimated more than 20 million consumers take out predatory payday loans every year. Now throw COVID-19 into the mix, and it’s not only necessary but crucial that our nation’s credit unions re-engage the small dollar loan space, market such products like the fundamentally-sound financial health assets they are, and reenergize the consumer lending landscape.
While the necessity of small dollar loans must feature heavily for credit union budgets heading into 2021, the method of delivery to consumers in the 2020s must be acknowledged. Mobile banking is potentially the most noteworthy fintech and financial wellness innovation since the Diners Club card was introduced in 1950, ushering in the era of the credit card. In the 2010s, mobile banking evolved from a novel tool to a dependable and time-saving addition to financial institutions’ consumer-friendly products and services. Research by The Pew Charitable Trusts in 2018 found that more than half of U.S. adults had made a mobile transaction within the last year. That statistic can only grow into a leading consumer financial health asset as we continue to innovate in this next decade.
Only the most forward-thinking innovators paired mobile and remote banking with being a central cog in weathering a global pandemic!
While advances in fintech have made mobile banking and digital small dollar lending increasingly useful and popular for many outdated systems and organizations, the process of credit approval can still take as long as three days to transfer funds to the waiting consumer account. To conquer such challenges, innovators are looking for ways to improve the U.S. mobile payment market, in part by speeding up the payment system and providing nearly instant transactions.
QCash Financial has already crossed that finish line. Our fully-configurable small dollar loan platform offers a relationship-based algorithm (rather than credit-based) that handles the instant underwriting, decisioning, and funding that determines approval or denial in and around one minute. If approved, funds are deposited immediately to the waiting members’ checking account. America finds itself in scary economic times, and consumers are looking for fast answers to their financial stress. We invite you to contact us through our website, Twitter or LinkedIn, or feel free to request a demonstration of our small dollar loan product to include in your credit union’s budget for 2021.