Mission is meeting mobile at Washington State Employees Credit Union ($2.9B, Olympia, WA).
WSECU began offering two short-term loans — QCash and QCash Plus — in 2004. It added online applications in 2009 and launched mobile applications for Apple and Android devices in May 2014. Currently, approximately 40% of applications come in through the web, 33% through mobile, and 17% via phone. The rest of the applications come through branch walk-ins.
Some 5% of the credit union’s nearly 228,000 members use the loans. Approximately 3,000 of its households are using QCash and 4,500 are using QCash Plus, says Julie Lind, WSECU’s vice president of consumer lending.
CU QUICK FACTS
Data as of 06.30.15
HQ: Olympia, WA
12-MO SHARE GROWTH: 8.17%
12-MO LOAN GROWTH: 12.82%
She says the QCash loans have produced approximately $2.7 million in fee and interest income since their launch, representing about 16 basis points of the credit union’s ROA. QCash loans range from $50 to $700 and include no application fees. The fixed APR for that loan is currently 73% and the note is for 60 days. QCash Plus carries a lower APR, 36%, and allows loan amounts of up to $4,000. There is a $25 loan application fee and payment can take up to three years. Neither QCash product requires a credit check, which means the credit union is there to lend money to its members when they need it the most.
Julie Lind, VP Consumer Lending, WSECU
Ben Morales, CTOO, WSECU
“We’re using QCash loans to help us achieve our mission of providing a more friction-free way of doing business with us while giving our members alternatives to other short-term loan options that could cost them a lot more,” says Ben Morales, WSECU’s chief technology and operations officer.
Members Across Demographics
WSECU members using the QCash loans are not necessarily avoiding payday lenders and they all aren’t low- to moderate-income borrowers.
“This solution is proving attractive to a wide spectrum of ages and socioeconomic status,” Morales says.
One example: One member was in the required settlement period after selling some securities. He used QCash Plus to bridge his cash needs before the funds cleared. The borrower paid off the loan the following week.
“It costs him the $25 fee and about four days of interest and he gets a whole lot of convenience in return,” Morales says. “Plus we get some revenue and a bit of interest out of it, so I’d call it member service at its best.”
Lind, meanwhile, points out the interest rates on the loans are well below the 390% permitted in the Evergreen State. The inability to roll over QCash loans further distinguishes them from payday products.
We’re using Q-Cash loans to help us achieve our mission of providing a more friction-free way of doing business with us while giving our members alternatives to other short-term loan options that could cost them a lot more.
According to Lind, members can receive approvals in less than a minute thanks in part to the automatic generation and archiving of disclosures and core system recording.
“It takes minimal human intervention,” the WSECU lending chief says. “And that’s only when they apply over the phone or in the branch.”
A Work In Progress
The mobile applications WSECU is currently offering actually represent the fifth version of the short-term loans.
“We started out as a paper-based solution in 2004 and then quickly adapted to a technology platform that ran inside the branch and contact center,” Morales says. “Then we evolved it onto the online and mobile channels.”
They’re not just low- to moderate-income borrowers. This solution is proving attractive to a wide spectrum of ages and socioeconomic status.
All that development work took place internally, but now that WSECU has taken the QCash loans to the cloud, it has the ability to scale up to offer the lending products to other credit unions through its newly formed CUSO named QCash Financial.
WSECU is the first client. Morales says other credit unions are taking a look at it, and whether they use WSECU’s solution or something else, he has some advice for credit unions already among or wanting to join the 615 in the country who now offer short-term loans.
“Focus on what you really want to do and be good at it,” the veteran technologist says. “Don’t try to add a lot of other things because that’s how you drive up costs. Our focus is on ‘people helping people.’ To do that, we have to be efficient and sustainable and reach people where they are. That’s what we’re doing with our QCash loans. We’re keeping it simple, fast, and efficient.”